LEGISLATING PROMISSORY ESTOPPEL IN MALAYSIA

By

Nur Hafiza Binti Jemi (2010360057)

Nursakina Binti Azman (2010992285)

Khairunnadiah Binti Rosli (2010134045)

Ahmad Farouq Bin Amir (2010313869)

Submitted in Partial Fulfillment of the Requirements

For the Degree of Bachelor of Legal Studies (Hons)

Universiti Teknologi Mara

Faculty of law

July 2013

The students/authors confirm that the work submitted is their own and that appropriate

credit has been given where reference has been made to work of others.

i

ACKNOWLEDGEMENTS

In the name of Allah, the Most Beneficent, the Most Merciful.

First and foremost, our deepest gratitude we bid to our ever so helpful supervisor,

Madam Rahimah Bee Binti Mohd Yusof for all her efforts and guidance which leads us

to the completion of this project paper. Without her guidance, we might not be able to

complete this project paper successfully.

We are also thankful to Dr. Hartini Binti Saripan for her hard work in teaching us the

first stage of this project paper in the Legal Research and Methodology for without her

assistance and teaching, we might not be able to come out with an idea to do a project

paper on this important area of law.

Special thanks we bid to our beloved friends who had helped and supported us

throughout the creation and completion of this project paper. All the teamwork and

efforts that has been shown had greatly assisted in making this project paper to come

into existence.

Last but not least, thank you to our most treasured family members for their continuous

supports, encouragements, and thoughtful advices during the completion of this project

paper. Without them, it will be harder for us to complete our very first project paper.

In a nutshell, we hope that this project paper can help other researchers in fulfilling

their own research paper as well as to give ideas and guidelines for Malaysia to

implement the doctrine of promissory estoppel into the Malaysian law.

ii

ABSTRACT

This research has been conducted to analyse the existing legal framework in Malaysia

governing the doctrine of promissory estoppel, where, special references have been

made to the legal position in Australia and United States of America. This research

aims to examine the adequacy in Malaysian law regarding the existing law which is

still in need to be revised in order to handle cases such as detrimental reliance upon the

promise. This study also reveals how the United States of America are craving for the

existence of a specific statutory provision for the land in order to uphold and serve the

justice fairly. The continuing evolution of promissory estoppel starts with the first

phase, which dated back to as early as the 16th century under the notion of reliance as

an acceptable element of contract law. The reliance notion is shown to be a thriving

alternative to the contractual element of consideration throughout the study. It has also

been revealed that the evolution of promissory estoppel in Malaysia did not end with

its formal promulgation but continues to be developed by the common law courts.

Thus, a collective study between Australia, Malaysia and United States of America has

been carried out in this study to determine the present parameters of promissory

estoppel where it is found may develop this doctrine to further levels.

iii

TABLE OF CONTENTS

Acknowledgement iiAbstract iiiContents ivList of Cases vi

CHAPTER ONE: INTRODUCTION

1.0 Introduction1.1 Background of Study 1.2 Problem Statement1.3 Research Objective1.4 Research Methodology1.5 Limitation of Study1.6 Significance of Study1.7 Literature Review

1.7.1 Conceptual Framework1.7.2 Legal Framework

1.8 Conclusion

CHAPTER TWO: HISTORY AND THE NEEDS OF PROMISSORY ESTOPPEL IN MALAYSIA

2.1 Introduction2.2 Development of Promissory Estoppel

2.2.1 United States of America2.2.2 England2.2.3 Australia

2.3 Limitation to the Doctrine of Promissory Estoppel2.4 The Development and the Drawback of Promissory Estoppel in Malaysia2.5 The Next Step towards Certainty in Legal Process2.6 Conclusion

iv

CHAPTER THREE: THE APPLICATION OF PROMISSORY ESTOPPEL IN

AUSTRALIA AND UNITED STATES OF AMERICA

3.0 Introduction3.1 The Application of Promissory in Australia3.2 The Birth of Promissory Estoppel3.3 The Problem as to the Application of Promissory Estoppel3.4 Conclusion3.5 The application of Promissory Estoppel in United States of America

3.5.1 The History3.5.2 The Birth and The Need of Enforcement3.5.3 The Application, Cases and Statistics

3.6 Conclusion

CHAPTER FOUR: RECOMMENDATION

4.1 Introduction4.2 Recommendation4.3 Conclusion

Bibliography

v

List of Cases

1. Bencon Development SdnBhd v Yeoh Cheng Heng [1996] 4 CLJ 25

2. Birmingham & District Land Co. v. London & North Western Railway Co., 40 Ch. D. 268

(C.A. 1888).

3. Boustead Trading (1985) Sdn Bhd v Arab-Malaysian Merchant Bank Bhd

4. Central London Property Trust Ltd v High Trees House Ltd [1947] KB

5. Chin v Miller (1981) 37 ALR 171

6. Combe v. Combe [1951] 2 K.B. 215, 219

7. Commonwealth of Australia v Verwayen(1990) 170 CLR 394

8. Currie v. Misa10 L.R. Exch. 153 (1875)

9. Dillwyn v. Llewelyn45 Eng. Rep. 1285 (Ch. 1862)

10. EA Ajayi v RT Briscoe (Nigeria) Ltd [1964] 1 WLR 1326 PC

11. Foakes v Beer (1884) 9 App Cas 605, HL

12. Greiner v. Greiner 293 P. 759 (Kan. 1930)

13. Grundt v Great Boulder Pty Gold Mines Ltd 59 CLR 641 (1937)

14. Hammersley v. De Biel (1845) 12 Cl& F 45

15. Hamer v. Sidway10 L.R. Exch.

16. Hayes v. Plantations Steel Co., 438 A.2d 1091, (1982)

17. Hoffman v. Red Owl Stores, Inc.26 Wis.2d 683

18. Hughes v Metropolitan Railway Co. (1877) 2 AC 439

19. Jackson v Corby (1979) 21 SASR 280

20. Jorden v. Money (1854) 5 HLC 185

21. Kinta Medical Centre v Foo Yet Kai Foundation &Anor [1997] MLJU 258

22. Lee Gleeson Pty Ltd v Sterling Estates Pty Ltd. [1991] 23 NSWLR 571

vi

23. Legione v Hateley[1983] 57 ALJR 152 CLR 406

24. Low v. Bouverie[1891] 3 Ch. 82 (C.A.)

25. O’ Donoghue v Minister for immigration and citizenship and Another, (No 3)- 121 ALD

575 (2011)

26. Perpetual Trustee Co Ltd v Pacific Coal Co pty Ltd 55 SR (NSW) 495 (1953)

27. Salehs v Romanous (2010) 79 NSWLR 453N

28. Salsbury v. Northwestern Bell Telephone Co., 221 N.W. 2d 609

29. Sim Siok Eng v Government of Malaysia [1978] 1 MLJ 15

30. SocieteItalo-Belge Pour le Commerce etI’Industries SA v Palm & Vegetable Oils

(Malaysia) Sdn Bhd, (The Post Chaser) [1982] 1 All E.R. 19.

31. Tang Heng Hua v. Tanah Manis Realty Sdn. Bhd (No. Syarikat : 15107-V) [2010] MLJU

1346

32. Teh Poh Wah v Seremban Securities Sdn Bhd [1996] MLJ 701

33. Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387

34. Wong Juat Eng v Then Thaw Eu & Anor [1965] MLJ 133

vii

CHAPTER ONE

INTRODUCTION

1.0 THE MISSION

This research paper aims to analyse the application of the doctrine of promissory

estoppel in Malaysia. This paper also aims to propose the implementation of the said

doctrine into the Malaysian legislation. The structure of this research paper will begin

with the background study of the research area that will clarify the development and

the problems faced by the Malaysia legal system regarding the application of the

doctrine of promissory estoppel.

Next, the problem statement and the objectives of this research are further construed.

Following the previous, the significance of the research will enlighten the reader about

the importance of promissory estoppel to be legislated into the Malaysia law. The

limitation and the research of the study are explained as well. Lastly, the conclusion is

written to conclude the chapter.

1.1 BACKGROUND OF STUDY

Promissory estoppel is an equitable doctrine applicable in contract law, which applies

when one party to a contract promises the other, by words or conduct, that he will not

enforce his right under the contract. Estoppel is a rule of evidence or rule of law, which

prevents a person from denying the truth of a statement he made or from denying facts

he alleged to exist.1 Promissory estoppel fall under the category of estoppel by

representation and is applicable when one party to a contract promises the other, either

by words or conduct, that he will not enforce his right under the contract wholly or

partially.2 If the other party has acted in reliance of that promise, the person making the

1 Martin (1986)

2 Wan IzatulAsma.“Enacting Promissory Estoppel into the Malaysian Law: Towards More Certainty in Litigation”.Journal of Politics and Law, (2012): 5.

1

promise will be bound by it and pursuant to that, he will not be allowed to sue on the

contract.3

This doctrine was first introduced in the case of Hughes v Metropolitan Railway Co.4

In Malaysia, the landmark case of Boustead Trading (1985) SdnBhd v Arab-Malaysian

Merchant Bank Bhd5, where Gopal Sri Ram JCA stated that “The time has come for

this court to recognize that the doctrine of estoppel is a flexible principle by which

justice is done according to the circumstances of the case. It is a doctrine of wide utility

and has been resorted in varying fact patterns to achieve justice. Indeed, the

circumstances in which the doctrine may operate are endless”. This can be taken as a

positive and clear indication that the doctrine is used in Malaysia, and the courts are in

favour of the usage of the doctrine.

This paper provides analytical studies on the application of the doctrine of Promissory

Estoppel in Malaysia, and comparatively will complement the study by looking at the

application of the doctrine in Australia and United States of America.6 Promissory

estoppel, which is an English doctrine of equity, has been widely accepted in common

law through the colonization by the British Empire. United States have enacted this

doctrine in Article 90 of the Second Restatement of Contract.7 Thus, by enacting

promissory estoppel into Malaysian law, it is beneficial because the enactment can be

considered as a constructive and advantages for the development in Malaysian legal

system.8

3 Supra Note 24 (1877) 2 AC 439, p.498, where the meaning of promissory estoppel, had been judicially explained by Lord Cairns

as follows, “…It’s the first principle upon which all courts of equity proceed, that if parties who have entered into definite and distinct terms involving certain legal results – certain penalties or legal forfeiture – afterwards by their consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealing which has thus taken place between the parties.”5 [1995] 3 MLJ 331, p.3446 Note 27 Ibid8 Ibid

2

1.2 PROBLEM STATEMENT

The usage of promissory estoppel in Malaysia is allowed by the virtue of Section 3(1)

of the Civil Law Act 1956. Since promissory estoppel is an equitable doctrine and was

first promulgated in 1947 through High Trees Case, superficially it is right to say that

the Malaysian courts are indeed free to adopt the doctrine.9Referring to the application

of the said doctrine into the Australia and England legal system, the main problems that

can be identified that limits the application of promissory estoppels are:

1) The parameters was not clearly defined for the easier application by the courts

because now that unconscionability is being the main focus in granting

promissory estoppel, in lieu of detrimental reliance, the thin line surrounding its

parameters are becoming more vague.10

2) The limited interpretation and application which may potentially obstruct the

development of equity and the administration of justice.11

3) The statutory restriction imposed by Section 3(1) of the Civil Law Act 1956

which necessitates the reception of this equitable doctrine to be subject to the

exclusionary phrase stated in the beginning of Section 3 denoting that its

application of promissory estoppel in Malaysia can only be carried out only

when there is a lacunae in such area of law.12

9 Supra note 210 Ibid11 Ibid12 Ibid

3

1.3 RESEARCH OBJECTIVE

1) To analyse the application of the doctrine of Promissory Estoppel in Malaysia.

2) To compare the application of the doctrine of Promissory Estoppel in Malaysia to

Australia, and the United States of America.

3) To propose the legislation of the doctrine of Promissory Estoppel in Malaysia.

1.4 RESEARCH METHODOLOGY

This research will adopt the qualitative research approach where the said method will

be further divided into two categories mainly, Doctrinal Research and Empirical

Research. In our research, we will use only doctrinal research method in order to

collect all of our research data.

In Doctrinal research, our primary sources will be the statutes and case laws that we

had successfully collected during our research. Such statutes include the Malaysian

Contracts Act 1950, and the Civil Law Act 1956. Aside from the Malaysian statutes,

we also referred to The Second Restatement of Contract of the United States of

America, and the English Contract Law and the Sale of Goods Act 1979 from the

United Kingdom.

Some relatively important cases to assist us in our research includes,Hughes v

Metropolitan Railway Co.13, the case was the first known instance of the concept of

promissory estoppel applied by the House of Lords in the United Kingdom. There is

also the case of Central London Property Trust Ltd v High Trees House Ltd14 to where

this is the leading case that helps to justified the application of the doctrine of

promissory estoppel in the United Kingdom after being resurrected by Lord Denning

upon his obiter dictum in the said case, a century after the judgment in the Hughes’s

13 Note 414 [1947] KB 130

4

case. For local jurisdiction, we found the case of Boustead Trading (1985) SdnBhd v

Arab-Malaysian Merchant Bank Bhd15

Our secondary sources in the Doctrinal Research will include journal articles, books,

and written commentaries on the case law and legislation. Several techniques of

Doctrinal analysis include Content analysis, Historical analysis, and also Comparative

analysis.

1.5 LIMITATION OF STUDY

Some limitations that we had encounter while during this research was the lacked of

suitable resources and authorities to support our claims. Although this study is to

provide an insight on the quality and the effectiveness of the promissory estoppel in

Malaysia, there were limited cases from the common law countries for us to refer to.

For the purpose of this research, we need a lot of cases and journals domestically as

well as internationally in order to make the data analysis, however we are lacking of

the said sources.

1.6 SIGNIFICANCE OF STUDY

The research of past cases have illustrated that promissory estoppel has now been

treated more flexibly than before where the requirement of reliance, many of the cases

was treated it as no longer needed and been replaced by the newer notion of

unconscionability which is based on good faith and laced with equality in bargaining

power.16

However, now the position has undergone a change. The present parameters in

comparing with those three countries are slowly recognizing the use of promissory

15 [1995] 3 MLJ 33116 Wan Izatul Asma Wan Talaat, The Continuing Evolution of Promissory Estoppel: From Rigidity to Flexibility,

2011.

5

estoppel as a sword although not as independent cause of action but rather as

“supporting” means to assist an existing cause of action as can be seen in the Australia

case, Jackson v Corby.17 The doctrine now has been available to plaintiffs not only as a

defence but also as an independent and the sole cause of action.18 By applying this

doctrine into Malaysia, our country can be in the same level with Australia

counterparts.19 By forseeing this development, the promissory estoppel can obtain the

objective of providing justice to all the contracting parties involved.20 A promisee, who

has suffered from acting upon a promise, can now seek redress from the court rather

than wait until a claim is filed against him.21

The quest for the statutory enactment of promissory estoppel into the Malaysian

statutory regime in this research may be considered as a constructive and beneficial

contribution to the development of Malaysian Law by following the footstep of the

American in enacting promissory estoppel into their Article 90 of Second Restatement

of Contract, it will gives two positive effects.22This would help in clarifying the

parameters of this doctrine, which would lead to more certainty in litigation.23 The

statutory enactment of the doctrine of promissory estoppel would certainly facilitate its

application by the Malaysian courts, which will no longer be bound by the restrictions

imposed by Section 3 (1) of the Civil Law Act 1956.24

Thus, by incorporating this doctrine into the Malaysian statutory regime, its parameter

will be clearly defined and no longer be restricted by the principle conferred in Section

3 (1) of the Civil Law Act 1956.

17 Ibid., See also case of Jackson v Corby (1979) 21 SASR 28018 Ibid19 Ibid., See also statement by Sri Ram JCA in Boustead case that the doctrine of promissory estoppel is no longer

restricted to the defendant but also to the plaintiff to recourse it by having the right to initiate a claim.20 Ibid21 Ibid22 Ibid23 Ibid24 Ibid

6

1.7 LITERATURE REVIEW

1.7.1 Conceptual Framework

It is common knowledge and mutual understanding for legal practitioners to conceive

that some arrangementsbetween two partieswill brought upon some sort of legal

consequences onlyifthere is a contractual agreement between them, and concretely

supported by consideration from the promisor.25Furthermore, promissory estoppel is

regularly claimed as some sort of defense mechanism in relation to contractual

situation.26The doctrine was designed in order to estop a person from changing or

altering his earlier promises.27Estoppel is a rule of evidence or rule of law, which

prevents a person from denying the truth of a statement he made from denying facts he

alleged to exist.28 However, without the element of consideration, the doctrine of

promissory estoppel cannot be raised as a cause of action to enforce a gratuitous

representation.29

This doctrine was first promulgated to prevent any occurrence of inequity or injustice

caused by the action of the promisor in backing out from his promise, which had

initially led the promise to act to his detriment.30 Many years have passed and this

doctrine has experienced evolution and being applied flexibly than the time

promulgated.31 The main focus now is the unconscionability in granting promissory

estoppel, and the three common law countries mainly Australia, United Kingdom, and

Malaysia are more than willing to do as equity demands.32

The definition33 of promissory estoppel is then used in many later cases. It can be said

that promissory estoppel, which falls under the category of estoppel by representation,

25 Margaret Halliwell, "Estoppel: unconscionability as a cause of action " Legal Stud. 15, no. 14 (1994). ; See also the Law Reform (Miscellaneous Provisions) Act 1989.

26 Ibid27 Supra Note 2.; See the definition from, Martin (1986),28 Ibid29 Supra Note 1630 Wan Izatul Asma Wan Talaat, "The Threats to the Limitations Outlining the Present Parameters of Promissory

Estoppel: A Comparative Study," International Journal of Business and Social Science 3, no. 6 (2012).31 Ibid32 Ibid

7

is applicable when one party to a contract promises the other, either by words or

conduct, that he will not enforce his right under the contract wholly or partially.34 If the

other party relies on that promise, the person making the promise will be bound by it

and he will not be allowed to sue under contract.

Traditionally, there are five limitations35to this doctrine, derived from the High Trees

and Hughes case, (i) Promissory estoppel only operates as a shield and not as a sword,

(ii) Pre-existing contractual relationship, (iii) Clear and unequivocal undertaking, (iv)

Proof of detrimental reliance on the representation, (v) There shall only be a temporary

suspension of contractual obligations and rights.These limitations36previously helped to

outline the parameters in applying this doctrine.37 In the present days, this doctrine is

applied more flexibly than the time it was first promulgated in 1887 through the case of

Hughes v Metropolitan Railway Co.38and complemented through the Central London

Property Trust Ltd v High Trees House Ltd.39

Even the casual observer of trends in estoppel jurisprudence may have noted that

discussions of promissory estoppel have recently become less ubiquitous in reported

decisions.40 This phenomenon has occurred against the backdrop of a proliferation of

so-called 'equitable' and proprietary estoppels, and judicial and scholarly exasperation

at the disorder into which estoppel issues generally appeared to have fallen.41

33Supra Note 2., See also Hughes v Metropolitan Railway Co. (1877) 2 AC 439 at page 498, “…It’s the first principle upon which all courts of equity proceed, that if parties who have entered into definite and distinct terms involving certain legal results – certain penalties or legal forfeiture – afterwards by their consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealing which has thus taken place between the parties.”34 Ibid35 Supra Note 3036 Ibid37 Ibid38 (1877) 2 AC 43939 [1947] KB; Ibid Note 30 40 Dawson, T. Brettel. "Estoppel and Obligation: The Modern Role of Estoppel by Convention." (1989).41Ibid ; See eg P. S. Atiyah, 'Contract and Fair Exchange' (1985) 35 U Tor LJ 1; P. Finn, 'Equitable Estoppel' in Essays in Equity, P. Finn (ed) (1985)

8

Putting the common law countries aside, by mid-nineteenth century, when the

American law systems were having problems with civil cases involving reliance and

unbargained-for promises, they started studying the concept of estoppel from the

English law and imported the idea into their jurisdictions which enabled them to create

a remedy that crystallized into the new doctrine of promissory estoppel.42 This is

because the doctrine of promissory estoppel is essentially a flexible, equitable doctrine

which lays out a general structure capable of being filled with its local content.43

The author of this article44 discusses on the 3 main problems in relation to the

application of promissory estoppel. He had identified the three main problems as: (1)

Promissory Estoppel cannot be used as the ground to create a cause of action (2) The

statutory requirements where the agreement must be in writing, (3) where the problem

lies on the jurisdictions itself.45

But, on the issue of the first limb, the author criticizes the approach made by the

common law courts for one are denied from taking legal action on the ground of

promissory estoppel. He is against the said approach and asked the courts to adopt the

application of the doctrine of estoppel as in the United States of America. The English

Law had developed beyond time, though since the doctrine of promissory estoppel are

still under development and a flexible doctrine, that is why it is difficult to ascertain

the requirements needed to exercise this doctrine in a more precise way.46

In 1946, Lord Denning at that time had resurrected the doctrine of promissory estoppel

into the common law.47 He uses language that if taken literally and out of context, it

may be reviewed as supporting the view that the doctrine of estoppel could be used to

create a legal relationship which was non-existent before.48 Thus, he spoke of a promise

42 Ngugi, Joel M. "Promissory Estoppel: The Life History of an Ideal Legal Transplant." University of Richmond Law Review 41, no. 2 (2007).

43 Supra Note 3044 Hickling, Dr. M. A. "Labouring with Promissory Estoppel: A Well-Worked Doctrine Working Well?"17 (1983).45 Ibid46 Supra Note 4247 Supra Note 248Ibid

9

which was intended to create legal relations and to be binding, and insisted that it had

to be honoured when the promisor knew that the promise was going to be acted upon

by the person to whom it was made and it was in fact acted upon.49

The more accurate manner in formulating the effect of the doctrine of promissory

estoppel is that one cannot take action for breach of promise even if the promise was

without consideration, but he may be able to take legal action by using the promise as

part of a cause of action.50 The doctrine has the effect of adding on the rights to one

party and obligations to the other. So, to deny that estoppel can be used as a cause of

action is no more than a matter of semantics.51

Based on the article,52 in the process of working on his hypothesis, the author discusses

several landmark cases which entangle with the doctrine of promissory estoppel. The

author successfully described the dictum of the Lords and the Judges in all the possible

cases where in the end, the article able to raise the contrast and vanish of the doctrine’s

effect as a defence.The author had pinpointed the mistakes made by the judges

regarding their discretionary power which failed to give a good dictum in cases such as

the Pinnel's Case.

The principle of promissory estoppel is described as, when one party to the contract

agreed upon an agreement, without fresh consideration, and later refused to not invoke

his part of the agreement, the principle of equity will be raised to in favour of the other

party.53 Nevertheless, the equitable rights are limited to certain conditions, mainly, (1)

that the other party has altered his position, (2) that the promisor can recede from his

promise by giving reasonable notice, which not necessarily a formal notice, giving the

promisee a reasonable opportunity of resuming his previous position before the

49 Ibid, see also the case of Central London Property Trust Ltd. v. High Trees House Ltd. [1947] K.B. 13o, pp. 134, 136.

50 Supra Note 251 Ibid52 Capper, David. "The Extinctive Effect of Promissory Estoppel."Common Law World Review(2008).53 Ibid

10

agreement occur, (3) the promise only becomes final and irrevocable if the promisee

cannot resume his position…54

The author’s formal conclusion agrees that per Denning J's judgment in High Trees is

better understood as meaning that the original debt is discharged provided the

conditions for promissory estoppel are satisfied.55

But the most important elements that need to be revived are reliance. Reliance is the

basis for promissory estoppel. It is the debtor's reliance which creates the unfairness of

the creditor going back on the promise to accept part payment.56 But there must be a

real reliance and this cannot be where the debtor merely makes the part payment

requested and does nothing more.57 Reliance also suggests another way of dealing with

cases on the pre-existing duty rule and allows for this rule and the part payment rule to

be dealt with in a similar way.58

The doctrine of promissory estoppel is treated as the cause of action.59 However, the

main root problem of promissory estoppel is that the requirement of the element of

consideration which means the requirement of a request by the promisor.60The issue

that arise is whether thedetriment which the promisee has suffered, but not at the

request of the promisor, should be actionable, despite the doctrine of consideration and

if so under what conditions.61

Then the author62 stated three solutions to deal with the issue that arises from the

doctrine of promissory estoppel. First, common law may be reformed from within,

whereby, in developing this doctrine in United States for instances, they appear to

54 Supra Note 44., See also the dictum by Lord Hodgson in the case of EA Ajayi v RT Briscoe (Nigeria) Ltd [1964] 1 WLR 1326 PC

55 Ibid56 Ibid57 Ibid58 Supra Note 4459 E.K. Teh, "Promissory As a Sword," Anglo-American Law Review 13(1984).60 Ibid61 Ibid62 Supra Note 42

11

escape from rigidity in application.63 Secondly, the doctrine of promissory estoppel

may be turned as a sword.64 Thirdly, the suggested solution is that the doctrine of

acquiescence may be extended.65This doctrine will not only prevent him from going

back on his promise but also permitting the promise to be enforced.66

The author in his article highlighted the possibility to use promissory estoppel as a

sword. He stated that if the doctrine of promissory estoppel wants to be used as a

sword, the requirement of existing contractual relationship should be abandoned. He is

of the opinion that rather than the needs to fulfil the condition of an actual contractual

relationship, it is more convenient to detach the doctrine from that condition in order to

turn the doctrine from a defence, into a cause of action.67

1.7.2 Legal Framework

England

The Court in England follows the traditional requirement of having a pre-existing

contractual relationship before a contract can be deemed legal.68 However, in 1968, the

English courts broke the chain in the Fancy Goods case.69 The English court also

departed from the third limitation which is the requirements of detrimental reliance,

where the current inclination is holding towards unconscionability.70 For instance, in

the case of Instance SocieteItalo-BelgePour le Commerce etI’Industries SA v Palm &

Vegetable Oils (Malaysia) SdnBhd, (The Post Chaser).71

Australia

63 Ibid64 Ibid., Read also, in Hughes v Metropolitan Railway Co. (1877) 2 AC 439, though this doctrine of promissory

estoppel applied in this case only acted as defensive, however it does not means that an action cannot be brought on a claim and that promised may be enforced.

65 Ibid., The promise given gratuitously but intended to be binding and intended to be acted upon by the promise with the acquiescence of promisor is binding on promisor.

66 Ibid67 Ibid68 Supra Note 3069 Ibid70 Ibid71 Supra Note 30., [1982] 1 All E.R. 19.

12

Promissory Estoppel was accepted in Australia through Legione v Hateley.72 However

only in Waltons Stores (Interstate) Ltd v Maher 73 that the Australian High Court made

a major breakthrough and decided that promissory estoppel alone could be used as a

cause of action against defendant even in the absence of any contractual relationship .74

Malaysia

Malaysia also attempts to shrink the limitation of this doctrine in the case of Boustead

Trading (1985) SdnBhd v Arab-Malaysian Merchant Bank Bhd [1995] 3 MLJ 331

where estoppel was considered as a doctrine of wide utility that must be resorted to in

varying fact patterns to achieve justice.75Gopal Sri Ram in this case stated that this

doctrine should be flexibly applied and the judgment mustbased on the circumstances

of each case.76

In comparing the position of promissory estoppels in England, Australia and Malaysia,

it can be viewed that the application of this doctrine is more complicated in England

because of the requirement of consideration and the judges in England also seen to be

more concerned with certainty and security rather that good faith and fairness.77

The author also stated that, from the threat shown by the common law courts as

discussed above, the traditional parameters of this doctrine is compromised and

departed from the traditional parameters through:78 (i) the use of promissory estoppels

as a cause of action, (ii) The denying of the requirement for pre-existing contractual

relationship, (iii) The dichotomy between detrimental reliance and unconscionability,

(iv) Promissory estoppels can now be a permanent and extinctive doctrine.79

72 Ibid.,[1983] 57 ALJR 152 CLR 40673 Ibid.,(1988) 164 CLR 38774 Ibid75 Ibid76 Ibid., Supra Note 2.; Also read, “The time has come for this court to recognize that the doctrine of estoppel is a

flexible principle by which justice is done according to the circumstances of the case. It is a doctrine of wide utility and has been resort in varying fact patterns to achieve justice. Indeed, the circumstances in which the doctrine may operate are endless”- Per Gopal Sri Ram in Boustead Trading (1985) SdnBhd v Arab-Malaysian Merchant Bank Bhd [1995] 3 MLJ 331.

77 Supra Note 3078 Ibid79 Ibid

13

It was concluded that, the threats to the limitations of promissory estoppels may pose

turbulence in contract law and open the flood gates in litigation. The attempts to depart

from the five traditional limitationsset by the Hughes and the High Trees cases have

caused the parameters of promissory estoppels to be no longer an establishment and

well-settled area leaving behind the following questions80 :

1. Whether in the interest of equity and justice, promissory estoppel can also be

used independently by a plaintiff as a cause of action?

2. Whether promissory estoppel can be granted to a plaintiff who has no pre-

existing contractual relationship with the defendant?

3. Whether the proof of unconscionable conduct supersedes the proof for

detriment suffered by the promisee as a result of reliance made on the

promisor’s representation?

4. Whether promissory estoppel can permanently extinguish the promisor’s

contractual rights?

The continuous development of the doctrine of promissoryestoppel has affected the

parameters and dimming the thin line surrounding its limitations.81 Since the

requirements of a pre-existing contractual relationship has been denied, the application

of this doctrine can be extended to gratuitous promise and go beyond the scope of

contract law which is the original domain of this doctrine.82 This phenomenon

consequentially affects the significance of the doctrine of accord and satisfaction and

certainty that stand amongst the elements of a valid contract.83

This doctrine operates to permanently estop a representee from exercising his

contractual rights and thus creates a redundancy to section 64 of Malaysian Contract

Law 1950 where waiver, which has permanent effect, has been provided under this

act.84

80 Ibid81 Ibid82 Ibid83 Supra Note 3084 Ibid

14

The author proposed for a statutory incorporation of the doctrine of Promissory

Estoppel into Malaysian law due to the continuing evolution of this doctrine which

seems to affect the present parameters.85 Once Promissory Estoppel has been enacted to

Malaysian law, its parameters will be clearly defined.86

There are no specific provisions in England which resemble specific application of

Promissory Estoppel except Section 21(1) of the Sale of Goods Act 1979.87 The

statutory regimes in Australia clearly prohibit any conduct that is unconscionable,

misleading and deceptive by giving remedial provision especially to the contracting

parties such as in the Australia trade practices Act 1974.88 This equitable doctrine

however, has been enacted as a statutory provision under Article 90 of the Second

Restatement of Contract which facilitate its easier application by the courts.89

Incorporation of this doctrine in Malaysian legislation may be considered as

constructive and is a beneficial contribution to the development of Malaysian law and

provides more certainty in the litigation.90

There are also some courts that affirm the use of the doctrine of promissory estoppel in

circumstances where the promisee rely on the promise made, and it is the promisor’s

duty to not cause any injurious reliance when it is reasonably foreseeable by the

promisor that the promisee does rely on the promise.91The courts do not offer a rigid

and mechanical relief to the innocent parties regarding promissory estoppel.92 The

remedies given are usually based on previous precedent and the courts uses a case-to-

85 Supra Note 286 Ibid87 Ibid Note 3088 Ibid89 Ibid90 Ibid91 Richmond, Collin F. “Promissory Estoppel- Only a Shield, Not a Sword?: Analysis of Dewitt V. Fleming, 828

N.E.2d 756 (III. App. 5th 2005).” (2005). 92 Supra Note 91

15

case basis in determining the appropriate relief for the innocent, taking into account the

elements of good faith, conscience, and justice.93

Promissory Estoppel is a defense for debtors because of the acts of reliance that are

only explicable in terms of the creditor's promise that part payment will do.94 The mere

payment of part of a debt indisputably due to the creditor cannot possibly be an act of

reliance by itself, promissory estoppel cannot extinguish a debt through mere part

payment.95

The doctrine of promissory estoppel continue to develop and some of the courts

expanded the use of the doctrine by enforcing the promises given, which otherwise

defective contracts and promises made during the course of preliminary negotiations.96

By doing this, the courts use promissory estoppel to provide a remedy for reliance upon

offers before acceptance.97

In Illinois, it is sufficient to deem the promise enforceable as long as the promisee

proved that he did relied on the promise made by the promisor even though there is no

consideration present at the time the promise was made.98 In other words, the

promisee’s foreseeable reliance is an effective substitute for consideration.99However,

the doctrine of promissory estoppel will not prevail the statute of Frauds under Illinois

jurisdiction.100

In Texas, the doctrine of promissory estoppel has been used diversely as the substitute

for the consideration, where, the doctrine can be used as a defensive plea to prevent the

promisor from escaping liability for not enforcing the promise that is absence from the

93 Ibid94Capper, David. "The Extinctive Effect of Promissory Estoppel."Common Law World Review (2008); per Lord

Denning in Foakes v Beer (1884) 9 App Cas 605, HL.95 Ibid96 Supra Note 4497 Ibid98 Supra note 9199 Ibid100 Ibid

16

element of consideration.101 Promissory Estoppel emerged originally as an extension of

the equitable concept of estoppel.102 The first thing that the courts will consider in

applying the doctrine is the conventional theories of consideration in enforcing the

promise as a contract.103 If there is no quid pro quo evidence, the courts will, in certain

circumstances enforced the promise by taking into consideration the theory that there

had been detrimental reliance and, if the enforcement is denied, that will lead to

injustice.104

Besides as the substitute in the absence of consideration, the courts of Texas also used

the doctrine of Promissory Estoppel as the defensive plea, a defence that can be raised

by the promisee.105 Thus, if A promises B that he will perform a certain act and B

changes his position in reliance on this promise, A will not be allowed to raise certain

defences that otherwise might have been available to him.106 B, will be allowed to

claim promissory estoppel as a rebuttal to A’s defensive pleas.107

The author in this article108 have concluded that the doctrine of promissory estoppel in

Texas has at least been applied in 3 major circumstances mainly: (1) as a substitute to

consideration, (2) it may also be used where there is consideration present, but the

contract terms are vague and indefinite to be enforced, and (3) as a means in satisfying

the Statute of Frauds.109 There is still no confirmation on to what extent the doctrine of

promissory estoppel can be manipulated and applied within the judgments by the future

courts since the end is still open.110 From what can be seen, the trend is indicating that

the doctrine is widening for the better and for substantial justice.111

101 Wright, Robert Lee. "Promissory Estoppel Marches on- Mooreburger." (1976).102 Ibid103 Ibid104 Supra Note 101105 Supra note 44106 Ibid107 Ibid108 Ibid109 Ibid 110 Ibid111 Ibid

17

1.8 CONCLUSION

Throughout the discussion above, we can clearly see that the doctrine of promissory

estoppel does not have a concrete foundation in terms of its application. The judgment

of a judge with regards to promissory estoppel differs between each other. Even the

requirements for a valid ground of promissory estoppel also vary in each case. As such

in Malaysia, the judges are still having problems with regards to making decision for

promissory estoppel. There is no solid guidance that can be used as the guidelines to

help the judges in their decision-making. Thus, Malaysia is in need of having the

doctrine of promissory estoppel legislated as one of the provision in the statute. By

having the doctrine legislated, it can help the judges in coming to their decision clearly

and unequivocally.

CHAPTER TWO

THE NEED OF PROMISSORY ESTOPPEL IN MALAYSIA

2.1 Introduction

In common law countries, the doctrine of promissory estoppel can only be used as a

defence mechanism to shield the innocent parties to a contract from an act of injustice.

18

However, when it comes to initiating a legal action, any contracting parties are

seemingly unable to raise the grounds of promissory estoppel as the cause of action.

The question that lingers in the minds of the injured parties will be how can we start an

action and fight for justice if the ground is not acceptable?

2.2 Development of Promissory Estoppel

Promissory estoppels is an equitable principle meant to prevent any occurrence of

inequity or injustice caused by the action of the promisor in backing out from his

promise, which had initially led the promise to act to his detriment.112

This doctrine was created to meet a perceived problem in the extant legal doctrines.113

2.2.1 United State of America

In having the promissory to be applied in the early stage, the most related

principle is the doctrine of consideration which means, all promises in which

the promisor did not specifically bargain for a return promise or performance

that it left unenforced even if the promisee had suffered substantial detriment as

a result of the promisee reliance on the promise made by promisor earlier.114

From this, it had extracted out the unfairness on promises made by the promisor

which resulted will made any person who relied on that promise to suffer loss

and grief.115

The evolution to the bargain theory before this stated that, consideration was

mainly defined only in terms of benefit to the promisor or detriment to the

promisee.116 It is enough that something is promised, done, forborne, or suffered

112 Supra Note 16113 Professor Alan Watson argues that transplants are the main source of legal change. See Alan Watson, Legal

Transplants: An Approach To Comparative Law, 95 (1974).   Lawyers prefer to imitate laws and principles from other jurisdictions rather than react directly to solve societal problems with an “original” rule or principle.See id. at 99.

114 See Charles L. Knapp, Rescuing Reliance: The Perils of Promissory Estoppel, 49 Hastings L.J. 1191, 1196 (1998).

115 Ibid116 Hamer, 27 N.E. at 257 (quoting William R. Anson, Principles of the English Law of Contract and of Agency in

its Relation to Contract 63 (Jerome C. Knowlton ed., 2d American ed. Chicago, Callaghan and Co. 1887)).

19

by the party to whom the promise is made as consideration for the promise

made to him.”117

The definition of consideration supplied by the English Exchequer Chamber

in Currie v. Misa118 in 1875:

“consist either in some right, interest, profit, or benefit accruing to the one

party, or some forbearance, detriment, loss, or responsibility given, suffered, or

undertaken by the other.’”119

By this definition, it means that a plaintiff needs to prove only one element in

order to succeed on a contract theory whether a benefit to the defendant or a

detriment to the plaintiff. Furthermore, the benefit or the detriment must have

been conferred, or suffered as the case may be, as an inducement for the

promise.120 The promise must as well be made and accepted as the conventional

motive or inducement for furnishing the consideration.121 It was then sparked a

clear principle of estoppels which means a bar that prevents one from asserting

a claim or right that contradicts what one has said or done before, or what has

been legally established as true.

Williston therefore suggested section 90 of the First Restatement but he was

fastidiously refusing calling it an “estoppel.”122 However, as he had admitted,

“there was a binding thread in all the classes of cases namely, the justifiable

117 Ibid118 10 L.R. Exch. 153 (1875).119 Hamer, 27 N.E. at 257 (quoting Currie, 10 L.R. Exch. at 162).120 In 1896, Professor Reuben Benjamin defined consideration in the following words:“When, at the desire of the promisor, the promisee, or any other person on his behalf, confers or promises to confer

any benefit upon the promisor, or incurs or promises to incur any detriment, and such benefit, detriment, or promise is the inducement of the promisor’s promise, it is a sufficient consideration for the promise.”

Reuben M. Benjamin, The General Principles of the American Law of Contract 21 (Indianapolis and Kansas City, Bowen-Merrill Co. 1889) (citations omitted).

121 Oliver Wendell Holmes, The Common Law, 289–94 (48th prtg.Boston, Little, Brown and Co. 1923) (1881).122 For the controversy of whether Williston had initially decided to completely exclude unbargained-for but relied

on promises from inclusion in the First Restatement, but acquiesced when he was confronted by Arthur Corbin with a pile of cases demonstrating the point.  

20

reliance of the promisee.”123 Why he formally avoided using the terminology

“estoppel” is because he perceived it to be too elastic.124

He also found the thread that linked the variety of non-bargain cases was the

justifiable reliance of the promise and he also brought those cases within the

jurisprudence of the dominant type of estoppels which is estoppels in pais.125

The basis of estoppel in pais was that the person who received a representation

reasonably and justifiably “acted on the representation” to her detriment.126 This

essential requirement of the estoppel in the language that the person who

receives the representation “must be prejudicially affected by the action he has

taken.”127

In the case of Greiner v. Greiner,128 a mother promised to convey a tract of land

to her son if the son moved from one county, where he was then residing, to

another, where the rest of the family lived.129 Following the promise, the son

gave up his homestead in the one county and moved to the other county, relying

on his mother’s promise to convey the land to him.130 The son set up his new

homestead in the eighty-acre tract of land identified by the mother, made

valuable improvements thereon, and lived there for nearly one year.131 When his

mother sought to evict him from the land and recover possession of the eighty-

acre tract of land, the Supreme Court of Kansas held that the son was entitled to

continued possession and deed.132 The Supreme Court of Kansas decided the

123 A.L.I. Commentaries124 William Shakespeare, Romeo and Juliet act 2, sc. 2.125 An estoppel in pais refers to an estoppel which does not spring from a record, or a deed. It is made to appear to

the jury by competent evidence. By an estoppel in pais a party is prevented by his/or her own conduct from obtaining the enforcement of a right which would operate to the detriment of another who justifiably relied on such conduct. Courts adopt estoppel in pais when a contradictory stance stands unfair to another person who relied on the original position.

126 See Bigelow, The Principles of Estoppel:   An Essay 78,82 (London, W. Maxwell & Son 1888).127 Ibid128 293 P. 759 (Kan. 1930).129 Ibid130 Ibid131 Ibid132 Ibid

21

case on a theory of promissory estoppel, and explicitly relied on section 90 of

the draft of the First Restatement for support.133

Then, Williston’s formulation of section 90 of the First Restatement ended up

unintentionally lead towards the fusing of estoppel into one area of law in the

United States. 134 This fusion was brought about since under the new

promissory estoppel doctrine, all representations which were justifiably relied

upon could be used as the basis of a cause of action.135

Williston invented section 90 precisely because he wanted to limit the spread of

such cases that were decided on non-bargain basis. Thus, the principle estoppels

meant by “equitable estoppel” was “estoppel in pais,” and the two terms were

used interchangeably.136 It was also known as “estoppel by conduct” or, at

times, as “estoppel by representation.”137 Even though Williston was mistaken

that justifiable reliance had been used as a basis for contractual relief, he was

not entirely mistaken. He derived this belief from the then existing

conceptualization of estoppel by misrepresentation.138

By the existing jurisprudence of reliance-based estoppel, Williston was right in

concluding that the doctrine could not be used to protect a party which could

otherwise have protected itself by contract.139 The creation of estoppel was

never meant to protect the indolent or the incompetent.140 Thus, if a party could

have protected itself by a contract, estoppel would not be used to protect her. 141

133 Ibid134 This fusion has, in part, provided inspiration for English law to achieve the same fusion. Australia followed the

U.S. lead in this regard. See Waltons Stores (Interstate) Ltd. v. Maher, 1988, 164 C.L.R. 387 [38].135 See Restatement (First) of Contracts S. 90 (1932)136 See, e.g., Lloyd Pospishil, Equitable Estoppel, 19 Neb. L. Bull. 222, 22728 (1940); Teeven, 137 See, e.g., Cooke, Charles L.O. Edwards, Note, Equitable Estoppel Estoppel by Representation, 12 Or. L. Rev.

316, 317 (1933).138 Ibid139 Bigelow,  LancelotFeilding Everest, The Law of Estoppel 279 (3d ed. 1923).140 Ibid141 See Metzger & Phillips,  (“[P]romisees who relied without the protection of an enforceable bargain might have

been deemed morally unworthy of recompense due to their foolishness.”).

22

2.2.2 England

Since the mid-nineteenth century, English law had been categorical that the

“doctrine of estoppel does not apply to a case where the representation is not a

representation of a fact, but a statement of something which the party intends

or does not intend to do.”142 This was emphatically stated by the House of

Lords in Jorden v. Money.143 As the professor Elizabeth Cooke noted, the effect

of the decision in Jorden ensured that the doctrine of estoppel could not form a

general principle of reliance-based promise enforcement.144Thus the reliance-

based estoppel began with roots in the rather formal estoppel in pais.

This is stated in the case of Hammersley v. De Biel.145 In this case, the plaintiff

sought to enforce a promise by his father-in-law to make a marriage settlement

in reliance on which the plaintiff married.146 No cause of action could lie in

contract since, clearly, there was no consideration for the

promise.147 Nonetheless, the House of Lords held the father-in-law’s estate

liable to pay the amount promised by the father-in-law.148 Lord Campbell cited

with approval Lord Cottenham, who heard the case at first instance, in laying

out what is, perhaps, the broadest statement of promissory estoppel in England

to date: “A representation made by one party for the purpose of influencing the

conduct of another, and acted on by him, will in general be sufficient to entitle

him to the assistance of a Court of Equity, for the purpose of realising such

representation.”149 Hammersley, then, stood for the then remarkable proposition

that equity would enforce all representations, including representations of

intention, if such representations were made for the purpose of influencing the

142 Jorden, 5 H.L.C. at 214 15, 10 Eng. Rep. at 882.143 (1854) 5 HLC 185144 Supra Note 137145 (1845) 12 Cl& F 45146 See 12 Cl& Fin. 45, 45 , 47, 8 Eng. Rep. 1312, 1313 (H.L. 1845).147 See ibid. at 65, 66, 8 Eng. Rep. at 1322 (Brougham, L., concurring).148 Ibid. at 61, 8 Eng. Rep. at 1320.149 Ibid. at 88, 8 Eng. Rep. at 1331.

23

conduct of another person, who then acted in reliance on such

representations.150

Thus the House of Lords further limited the utility of reliance-based estoppel in

England in 1891 in the case of Low v. Bouverie.151 In this case, the House of

Lords categorically ruled that estoppel is only a rule of evidence and cannot

found an action. The decision in Low that estoppel was not a cause of action but

could only prevent rights from being enforced when it was inequitable to do so

have ensured that estoppel emerged from the nineteenth century as a rather mild

doctrine. It was now only a defence mechanism: a shield, never a

sword.152 With the reliance-based estoppel so consigned as a rule of evidence

and a point of pleading, the doctrine of consideration emerged as the sole test of

contractual obligations under English law.153

One form of reliance-based estoppel, however, continued to thrive in England

throughout this period of decline which is named as proprietary estoppel.

The well-known proprietary case in England is Dillwyn v. Llewelyn.154 In this

case, a father “gave” land to his son, the plaintiff.155 No formal conveyance was

ever made, however, so the gift was not perfected.156 Nonetheless, with the

assent of the father, the son proceeded to build a home on the land.157 On the

death of the father, the son sought a declaration that he was entitled to the land

in the face of a will granting the land to other members of the family. 158 The

court gave the son the right to call for a proper conveyance159 Lord Chancellor

150 For other cases in this line of reasoning see Loffus v. Maw, 3 Giff. 592, 66 Eng. Rep. 59 (V.C. 1862),Piggot v. Stratton, 1 De G.F. & J. 33, 45 Eng. Rep. 271 (Ch. 1859), and Prole v. Soady, 2 Giff. 1, 66 Eng. Rep. 1 (V.C. 1859).

151 [1891] 3 Ch. 82 (C.A.).152 See, e.g., Combe v. Combe, [1951] 2 K.B. 215, 219153 Supra Note 139154 De G.F. & J. 517, 45 Eng. Rep. 1285 (Ch. 1862)155 See id. at 520, 45 Eng. Rep. at 1286156 Ibid157 Ibid158 Ibid159 Ibid

24

Westbury held that while a voluntary agreement to make a gift was not

enforceable in equity for lack of consideration, where the donee had, with the

knowledge of the promisor, expended money on the land, the donee acquired an

interest in the land because the donee had acquired a reasonable expectation in

the land.160

Hence, in England, the doctrine of proprietary estoppel survived the period in

the 19th century when consideration was expanded and other reliance-based

estoppels were limited.

Aside from this doctrine of proprietary estoppel, in the late nineteenth century,

the growth of commerce and the need for more certainty and flexibility in

business necessitated a judicial revision of the restriction of the reliance-based

estoppel.161 This relaxation came slowly and haltingly in the two cases

of Hughes v. Metropolitan Railway Co.162 and Birmingham & District Land Co.

v. London & North Western Railway Co.,163 decided in 1877 and 1888

respectively. Eleven years later, in Birmingham and District Land Co., the

Court of Appeal endorsed and extended the doctrine of “equitable estoppel”

enunciated in Hughes.164

It should be clear that what is in operation here is a form of the doctrine that the

American lawyer would easily identify as “promissory estoppel.”165 It should

again be clear that this doctrine closely resembles the reliance-based estoppel

enunciated by Lord Cotenham in Hammersley.166 It should be noted, however,

that as the doctrine re-emerges in England in the second half of the nineteenth

160 Supra Note 16161 Supra Note 113162 Ibid.,[1877] 2 A.C. 439 (H.L.).163 Ibid.,40 Ch. D. 268 (C.A. 1888).164 Ibid165 Supra Note 113166 Ibid., [1947] K.B. 130 (1946).

25

century in Hughes and Birmingham & District Land Co,167 it has been

significantly emasculated.168

Two important conclusions can be drawn from this short history of reliance-

based estoppel in England. The first point to note is that though reliance-based

estoppel first emerged as a generalized estoppel with offensive capacity, it was

soon blunted by the emerging force of contract law’s doctrine of consideration.

One, Jorden held that for an estoppel to arise there had to be a representation of

fact, as opposed to a representation of future intention. Two, Low held that an

estoppel does not create a cause of action but is merely a rule of evidence.

Nonetheless, the “new” doctrine in Hughes somewhat revitalized this reliance-

based estoppel. Under Hughes, parties who were already in a contractual

relationship could, at least, set up an estoppel to prevent the other party from

going back on their word, and thereby succeed in a cause of action based on the

existing contract.

The effect of these developments was that during the period when the legislator

was writing the First Restatement in the United States, English law had already

found two related, but distinct, doctrines alleviate the problems caused by the

rigidity of the doctrine of consideration. These are the Hughes doctrine and the

doctrine of proprietary estoppel. The basic principle espoused in these two

doctrines is the same one adopted in the doctrine of promissory estoppel as it

developed in the United States.

Since Justice Denning gave his judgment in the High Trees169 Case in 1947, at

least fifteen years after the First Restatement was adopted, we can only assume

that he knew about the American development. It has been suggested by some

commentators that this was Denning’s ultimate goal or wish but that he felt

hamstrung by the authorities.

167 Ibid., (1889) LR 40 Ch D 268168 Ibid 169 [1947] K.B. 130 (1946)

26

If one begins with the categorical statement of the law enunciated by the Privy

Council in Ajayi v. R.T. Briscoe (Nigeria) Ltd,170 one might conclude that the

American developments of the doctrine of promissory estoppel have had little

effect in influencing English law. This doctrinal position, however, masks some

nuanced changes to the English doctrine of promissory estoppel as it developed,

or at least the legal discourse about it.

2.2.3 Australia

Paul Key, one of the Australia solicitors has drawn attention to two decisions of

the High Court of Australia (Waltons Stores (Interstate) Ltd v

Maher171 and Commonwealth of Australia v Verwayen172 which he describes as

a fundamental attack on the traditional perception of estoppel as a complete

defence.173

These Australian cases have been cited in a number of other English

cases.174 English legal commentators have also drawn inspiration from the

Australian developments to urge English courts to “unify” estoppel into a single

doctrine with offensive.175

He interprets the Waltons Stores doctrine as “perhaps more likely than the

American doctrine to be influential in England since the Australian and English

judicial styles of argument and analysis are closer to each other than either is

to the American.” 176

2.3 Limitations to the doctrine of Promissory Estoppel

170  [1964] 3 All ER 556171 (1988) 164 CLR 387172 (1990) 170 CLR 394)173 Gordon Derby, [2001] EWCA (Civ) 369, (citations omitted); see also Nat’l Westminster Bank PLC v. Somer

Int’l (UK) Ltd., [2001] EWCA (Civ) 970, [2002] 3 W.L.R. 64 (Potter, L.J.).174 See, e.g., Petromec Inc. v. PetroleoBrasileiro S.A. Petrobras, [2004] EWHC (Comm) 127; Brennan v. Bolt

Burdon [2003] EWHC (QB) 2493; Actionstrength Ltd. v. Int’l Glass Eng’g, [2003] UKHL 17, [2003] 2 W.L.R. 1060; In re Goldcorp Exch. Ltd. [1994] 3 W.L.R. 199.

175 Supra Note 174176 Ibid

27

As if it is a tradition, an equitable doctrine of promissory estoppel had its limitation in

many areas. This however, helps in determining to what extent is the problem at hand.

Accordingly, there are five common limitations of promissory estoppel,177 which are:

1. The doctrine of promissory estoppel is limitedly used only as a defense for

the innocent party, and they are unable to create legal action against another

on the ground of the doctrine since the court does not recognize promissory

estoppels as a cause of action.178

2. There is a need for a contractual agreement between both parties before

either of them can invoke the doctrine of promissory estoppels which means

that the doctrine is limited only for cases where the contractual relationship

exist beforehand.179

3. The court is strict in determining whether the promise was made in a precise

and unambiguous manner, regardless of whether the promise is expressly

made or not.180

4. The requirement for the innocent party to prove that by relying on the

promise, the said party incurred losses due to the fact that the breaching

party had turned back on their promise. The court will scrutinize the

“injury” incurred by the innocent party until proven that there is a possible

detriment due to the reliance made.181

5. Adopting the principle of executory promise, the doctrine limits the

representation and promises to only relate towards past or present events 177 Supra Note 2178 Ibid179 Ibid180 Ibid181 Ibid

28

whereby any future events, those promises are excluded in accordance to

the doctrine. This brings us to the temporary suspension of contractual

obligations and rights.182

2.4 The Development and the Drawback of Promissory Estoppel in Malaysia

In Malaysia, the doctrine of promissory estoppel is developing regularly. Since the

doctrine is deemed as flexible in a way, the judgment also varies in accordance with the

conscience of the judge. Taking into example the judgment by the Federal Court of

Malaysia upon the landmark case of Boustead Trading SdnBhd v Arab-Malaysia

Merchant Bank Ltd183, as per Gopal Sri Ram JCA in his judgment:

“The time has come for this court to recognize that the doctrine of

estoppel is a flexible principle by which justice is done according to the

circumstances of the case. It is a doctrine of wide utility and has been

resorted to in varying fact patterns to achieve justice. Indeed, the

circumstances in which the doctrine may operate are endless.”184

In the said case, the judges saw no point of denying the equitable right of the plaintiff

who raised the defence of promissory estoppel as a cause of action to which the right

may be lost to him if ever the defendant plea in court.185 They are of the opinion that

the doctrine itself is flexible in a way that it creates the opportunity for an open ending,

meaning that, the judges themselves may decide their judgments according to the

circumstances of each cases, which may vary from one case to another.186

182 Ibid183 [1995] 3 MLJ 331184 Supra Note 181.,pg 344185 Matta, Ali Mohammad. "Promissory Estoppel: Does Malaysia Need This Doctrine?".Malayan Law Journal

Articles 6 (2006).186 Ibid

29

Another case is Tang Heng Hua v. Tanah Manis Realty Sdn. Bhd (No. Syarikat :

15107-V)187,where in this case,the Respondent is the registered proprietor of a piece of

land where a bungalow was erected thereon bearing postal address No. 99, Jalan

Tanjung Tokong, Penang. The Appellant has been in occupation of the said land as a

tenant since 1987. The last tenancy agreement entered into between the parties was the

Tenancy Agreement dated 11.1.1999 which was for a fixed period of two years

commencing on 1.7.1998 and expiring on 30.6.2000. The monthly rental was RM

1,800.00. The Appellant apparently had used the part of the land to carry out business

as used car dealer and car bodywork and repair workshop as well as dealing in auto

accessories. The Appellant had carried out structural renovation works on the Property.

The Respondent later in time had served Notice to Quit to the Appellant and asked to

deliver vacant possession of the land, to which the latter had failed to comply with the

instruction and refused to deliver vacant possession of the said land. So, one of the

issues in dispute was whether the Appellant has acquired an equity to estop the

Respondent from gaining vacant possession. The High Court of Penang decided in

favour of the Respondent and upheld the judgment of the trial court. The judges

proceed with the judgment and applying the principle of equity where “those who

comes to equity must come with clean hands”, to where the appellant was proven to

come to court with tainted hands where he had acted in an illegal and contumelious

manner. The appellant failed to estop the respondent from gaining his vacant

possession of the said premises.

It can be seen based on the case above where the court adopted the maxim of equity,

“those who comes to equity must come with clean hands”, meaning, the party who

seeks for justice from the court must come in good faith and with no ill-mannered

intention. We can see that the appellant’s defence of equitable estoppel backfired when

the judges in this case adopted the maxim, in favour of the respondent. This justifies

the earlier statement where the doctrine of promissory estoppel can be exercised widely

187 [2010] MLJU 1346

30

where the judgments may vary from one judge to another, in accordance with the

circumstances of the case.

Hence, the findings from this research would justify that Malaysia needs the doctrine of

promissory estoppel to be legislated into the Malaysian Law in order to create

certainties in litigation with regards to the application of promissory estoppel. It is

because, despite all the positive growth in the application of the doctrine by the

judiciary branch, there is still a lot of reluctance experienced by some of the Malaysian

judges to give judgment in favour of promissory estoppel. They need to determine that

all the elements of promissory estoppel have been fulfilled completely before they can

give judgments. This is where the problem arises. Without legislating promissory

estoppel as one of the provision imprinted inside the Malaysian Law, the judges will be

hindered from identifying the true elements of the promissory estoppel. Does the

element of consideration essential in the matter of promissory estoppel? Shall there be

some form of reliance that the innocent parties need to prove in order to succeed in

their claim? All sorts of questions will arise in court and since the doctrine of

promissory estoppel is merely an ideology that had been accepted and applied in most

of the Common Law countries, there are many versions of interpretations of the

doctrine of promissory estoppel. Judges in some countries which adopted promissory

estoppel sees no great importancein the element of detrimental reliance whereas some

other countries considered detrimental reliance or other form of reliance as the most

essential element in raising the defence of promissory estoppel.

Thus, we can see that it is hard for the courts in Malaysia to apply specifically to

thedefence of Promissory Estoppel itself as the shield to injustice act. The reluctance of

the judges to exercise the doctrine of Promissory Estoppel as the specific defence

contributes to the lack of relevant cases reported and brought upon the court.

In the case of Kinta Medical Centre v Foo Yet Kai Foundation &Anor188, it was held

that the plaintiff’s claim upon the first defendant had been dismissed by the court since

188[1997] MLJU 258

31

they considers that there was no actual assurance made by the first defendant to the

plaintiff to rely upon. In this case, we can see that in Malaysia, the courts still require

the presence of consideration or assurance for the defence of promissory estoppel to

succeed. They analysed critically to what extent the form of consideration or assurance

had been given to the innocent parties that leads them to put their reliance to the

promise made by the promisor. This had become problems to the innocent parties since

there is no yardstick to determine which word is considered as the most probable to

show the assurance or consideration of the promise. If the judges are still strict on

evaluating the level of assurance, then it will be difficult for the innocent parties, and

their rights may not be upheld.

This case had supported the statement above where it had been previously stated that

one of the common limitation of the doctrine of promissory estoppel is that the court is

strict in determining whether the promise was made in a precise and unambiguous

manner, regardless of whether the promise is expressly made or not. There is also

limitation regarding the persistent of the court in scrutinizing whether the innocent

party had incurred detrimental reliance which reduced the party into pecuniary losses.

2.5 The Next Step towards Certainty in Legal Process

What Malaysian Law need right now is an implimentation of a clause or a section

regarding the doctrine of promissory estoppel in the Malaysia Contracts Act 1960. By

legislating the doctrine of promissory estoppel into the Contracts Act 1960, the

doctrine will no longer only be an ideology, but it can proudly stand on its own and

made itself as a composed and useful doctrine.

For example, the United States of America has adopted the doctrine of promissory

estoppel and legislated the certain doctrine into their legislation, specifically, under

Article 90 of the Second Restatement of Contract.189

189 Supra Note 2

32

Three reasons can be deduced on why Malaysia needs to legislate promissory estoppel 190 which are, (1) the continuous development and evolution of the promissory

estoppels in Common Law such as in England, Australia, India, or even Malaysia has

led to the vagueness of the parameters of the application of the doctrine.191 Whose

judgments shall be followed? Which court has more logical decision regarding

promissory estoppels? Those are some questions commonly asked in determining the

decision of promissory estoppels in court since there is an absence of clear and

unequivocal parameters that can set up the actual area of promissory estoppels in the

countries. By having the promissory estoppels legislated, this act can lead to a more

certainty in litigation and facilitate the Malaysian Court in their judgments. (2) Since

long ago, the doctrine of promissory estoppels are deemed as an equitable doctrine

which follows the rules of equity as the source of reference.192 As an equitable doctrine,

promissory estoppels cannot be interpreted freely by the Malaysian courts. This

rendered difficulty to the Malaysian judges since the rules of equity make the doctrine

becomes more rigid and create a certain restrictive barrier during the judgments to

where the case can only be solved with the adoption of the maxims of equity. (3)

Another reason for the legislation of promissory estoppel into the Malaysian Law is in

connection with the implimentation of Section 3(1) of the Civil Law Act which

provides that the principles of equity can only be applied when there is a lacunae in the

Malaysian Law and it is suitable with the local circumstances.193

Regarding this matter, the application of promissory estoppel is being limited to only if

there is a loophole or a need of equity in the Malaysian Law. The question that arises is

on whether there is a lacunae in the Malaysian Law regarding the defence of

promissory estoppel? Accordingly, in the Malaysia Contracts Act 1960, a certain

190 Ibid191 Ibid192 Ibid193 Note 2

33

section, specifically section 64194 provides the almost similar principle in nature as

promissory estoppel. The only difference is that section 64 which statutorily provides

for the wavering of contract, involves an actual contractual agreement, and not only by

the promise. Therefore, both the general provision of Section 3(1) of the Civil Law Act

1956 and Section 64 of the Contracts Act 1950 had led to the creation of restrictions

towards the reception of Promissory Estoppels in Malaysia. The provisions had

restricted the doctrine of Promissory Estoppel in the manners that the doctrine can only

be applied when there is no written law in Malaysia, which unfortunately to us, there is

written law of the same effect (S.64), when the circumstances of the States of Malaysia

and their respective inhabitants permits, and only when the local circumstances

rendered the doctrine to be necessary.

The bright side of having a statutory provision with regards to promissory estoppel is

that, it would assist in determining the actual parameters of the doctrine, which would

eventually lead to the certainty in the Malaysian litigation. Another positive effect of

the legislation of promissory estoppels is that it would help in the exercised of the

doctrine by the Malaysian courts which will no longer be restricted by the rigidity of

the rules of equity or to be limited by Section 3(1) of the Civil Law Act 1956.195

2.6 Conclusion

The doctrine of promissory estoppel has been confronted with a lot of issues that until

this moment of time, there is still no certainty of the application of the doctrine in the

Malaysian Law. The country is in need of further implementation of the promissory

estoppel into a more composed and concrete form which can give the guidance to the

judges in their judgment. We should observe the determination of the Australia’s Court

in exercising and applying the doctrine of promissory estoppel into the domestic laws

194 Section 64 of Contracts Act 1950. “Every promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit.”

195 Supra note 2

34

which evolves rapidly day by day. Bearing in mind that, the doctrine is speedily

developing in the said country, and the judges are more than willing to analyse the

promissory estoppel and applied the doctrine not only as the defence for the innocent

parties, but also as a cause of action. Taking into the example also, the brilliant act

done by the United States of America in legislating the promissory estoppel into their

domestic law which helps a lot by providing certainties in their litigation process as

well as eliminating all the vagueness in the application of the doctrine itself. Thus, in

order for the law in Malaysia to evolve into a more efficient legislation and in order to

overcome the problems regarding promissory estoppel, the above needs have to be

fulfilled.

CHAPTER THREE

THE APPLICATION OF PROMISSORY ESTOPPEL IN

AUSTRALIA AND UNITED STATES OF AMERICA

3.0 Introduction

This chapter will examine the law of promissory estoppel as applied in Australia and

United States of America. Both countries conclusively applied this doctrine since ages.

And we will expose certain aspects such as elements, cases, problems which become

the fundamental issue in the process of creating, constructing and amending the law.

35

3.1 The application of Promissory Estoppel in Australia

According to Australian perspective, Promissory Estoppel should not be used as a

sword but also shield. The Australian court adopted this principle and escaped from the

restricted traditional view which limiting the application of Promissory Estoppel only

as a defence.The traditional view of the application of promissory estoppel is reflected

in Hughes v Metropolitan Railway Co196 whereby the court is reluctant to allow

Promissory Estoppel as cause of action. This traditional view is also followed in the

decision in the case of Perpetual Trustee Co Ltd v Pacific Coal Co pty Ltd197, which

stated that estoppels could only be relied defensively as a shield and not as a sword.

Thus, it can be seen that Australian court has made a big change in the law in respect of

promissory estoppel by using it not only as a shield or defence, but also as a sword or

cause of action in court. The application of promissory estoppels as both shield and

sword can be seen in the case of Waltons Stores v Maher198 whereby the court in this

case establishes the application of promissory estoppels as both shield and sword. The

court in this case stated that promissory estoppels can be used as a cause of action in

four situations.199

1. Promisor makes a promise

2. When a promisor creates or encourages an assumption that a contract will come

into existence or a promise will be performed

3. When the promisee relies on the representation to his detriment

4. It is an unconscionable conduct of the promisor to ignore the promise he has

made.200

196 Hughes v Metropolitan Railway LR 2 App Cas 439 (1876-77)197 55 SR (NSW) 495 (1953)198 (1988) 164 CLR 387199 See in Waltons Stores v Maher (1988) 164 CLR 387200 Ibid

36

If the plaintiff able to fulfill all this elements, he should succeed to raise his action in

court by using promissory estoppel as his cause of action.Thus, it can be conclude that

promissory estoppel will only come to the relief of a plaintiff who has acted to his

detriment by assuming there is a contract between both parties and it is unconscionable

for the other party to ignore the assumption.

According to Brennan J in the same case201, in order to establish equitable estoppels,

there are six elements which must be met202.

1. Plaintiff has assumed an expected that a legal relationship exists between both

parties

2. It is the defendant whom induced plaintiff to assume there is a legal relationship

between them

3. The plaintiff act as what he relies on the assumption

4. The defendant knew or intended him to do so

5. The plaintiff’s act or omission will cause him to his detriment if the assumption

is not fulfilled

6. The defendant has failed to fulfill the plaintiff’s assumption and caused the

plaintiff to act to his detriment.203

Deanne J, giving his judgement in this case by saying that, the principle of estoppels

works by preventing a person from departing from his promise of an existing future

fact and knowingly that his act will cause the other party whom relies to his promise to

act to his detriment.204So far, the doctrine prevents a departure from representation of a

person in a pre-existing contractual relationship, and he will have to perform as what

he had promised. This principle is also illustrated in a recent case of Saleh v

Romanous205which concerned about the sale of 163 Kissing Point Road206. The

201 Ibid202 Ibid 203 Ibid204 Supra Note 197205 79 NSWLR 453N (2010)206 NSWLR 274 (2010)

37

appellants, Michael and Rose Saleh owned 163 Kissing Point Road. Meanwhile,

Michael’s brother, Edmund owned 165 Kissing Point Road, Dundas. The Salehs were

then obtained consent for the development of eight strata titled two storey townhouses

on the two properties. A contract was entered between the Salehs and the Romanous

for the selling of 163 Kissing Point Road for an agreed sum with the assumption that

the property will be developed into two storey townhouse along with the neighbouring

property. Before any exchange of contract happens between the parties, a contractual

promise had been made by Salehs stating that if no development made by Edmond, the

Romanous would not have to purchase the property and their money will be return.

After an exchange of contract occurred, Edmond did not wish to proceed with the

development, so the Romanous want to rescind the contract.

Court of appeal held that the promise made by Salehs has a legal binding effect on the

basis of promissory estoppel even though it is a pre-contractual promise. The court also

held that “promissory estoppel is a restraint on an enforcement of rights, and thus

unlike proprietary estoppels, it must be negative in substance”207

In order to invoke the doctrine of promissory estoppel, the promise itself must be clear

and unambiguous. The application of it can be seen in a latest case of O’ Donoghue v

Minister for immigration and citizenship and Another,208 Mister Donoghue, an Irish

citizen applied for a visa on the basis of that he would be employed as a legal

consultant by a legal firm, Hope Lawyers. Mr Donoghue was granted the visa and

allowing him to stay in Australia for 28 days starting from the date of the decision.

However at the end of 2004, Mr O’ Donoghue was arrested pursuant to Extradition Act

1988 for offences he has been committed in Republic of Ireland. While the extradition

proceedings were ongoing, he was informed that his application for a visa was

‘ongoing’ and there were few things required to be completed. Later, after the

completion of the extradition challenges in August 2009, Mr O’ Donoghue’s

207 Supra note 203208 (No 3)- 121 ALD 575 (2011)

38

application for visa was rejected due to the absence of written confirmation from the

Hope Lawyers that the employment position is still available.

The department has before this requested for the particular information from him or his

application for a visa will be decided without the information requested. Mr O’

Donoghue fails to provide the information requested by the department. He then

challenges the decision and claimed that the minister was stopped from determining the

application adversely prior to the final determination in the extradition proceedings.

The court held thatthe promise made was not sufficiently clear and unambiguous, so

the defence of promissory estoppels would not be relied on. The court in this case also

rejected any claim of reliance or detriment on the part of the party whom relied on the

promise.

Australian court stressed on the application of promissory estoppel to prevent

unconscionability of conduct as stated in the case of Commonwealth of Australia v

Verwayen209 whereby in this case, two warships were collided and the plaintiff wished

to take action for the injuries sustained even though the cause of action happened 20

years ago. The commonwealth did not plead the limitation defence nor deny it owed no

duty of care to verwayen on the reason that their policy was not to contest liability and

not to plead the limitation defence210. As a result, Verwayen continued to take action,

however Commonwealth later wished to change their policy to raise defence that the

claim was time-barred and they owe no duty of care to Verwayen. The court in this

case held that, the commonwealth was not free to dispute its liability to Verwayen by

reason of estoppel and waiver211

3.2 The birth of promissory estoppels

This doctrine was first recognized in the case of Grundt v Great Boulder Pty Gold

Mines Ltd212 where the case was concerned about a tribute agreement which allows the

209 170 CLR 394 (1990)210 Talaat, Wan IzatulAsma Wan. The Continuing Evolution of Promissory Estoppel : From

Rigidity to Flexibility. Universiti Malaysia Terengganu, : Terengganu, 2011. 211 Ibid, at p. 44212 59 CLR 641 (1937)

39

plaintiff to mine ore belongs to the defendant. On 8 may 1935, the mine owner told

plaintiff that he is mining the ore beyond the agreed area which is not covered in the

agreement. Later, the plaintiff offered to stop the mining until the dispute as to the

extent of the mining area is settled by arbitration. However, the owner urged him to

continue the mining and the mining owner continue to process the ore and account for

half share from it. Later, the owner wished to rescind the agreement.

The High Court of Australia delivers their judgment by saying that plaintiff has

committed a trespass for mining the ore beyond the area specified in the agreement and

would have to account for all the extra profit he gained up to May 1935213. However, he

will not be accountable for the profit he gained from May 1935 up until the attempted

cancellation.214

The majority opinion of the court in this case did not think there were any equitable

estoppels but they were of the opinion that it is inequitable to allow the mine owner to

recover the extra profit gained since it had continued to receive the extra ore, process it

and account for the profit215. The court also held that “payments made in respect of a

disputed liability are voluntary and cannot be recovered either directly or as damages

representing part of a loss”216

Later, this equitable doctrine attained its legitimacy and recognition in the case of

Legione v Hateley 217 whereby in this case, the appellant is the vendor and the

purchaser is the respondent. Both parties entered into a sale and purchase agreement on

a piece of land. The respondent paid the deposit but the balance was due one year later.

The respondent then occupied the land and builds a dwelling house on it without the

knowledge of the appellant. They also intended to finance the purchase money by the

sale of another property but the sale fell through. The payment of the balance must be

213 ibid214 ibid215 ibid216 ibid217 (1983) 152 CLR 406

40

completed on 1st July 1935, however, the respondent in their letter on 29 th July ask for

an extension for the payment. The appellant’s solicitor refuses to extend the due date

and told them to apply for a bridging loan. In the meantime, the completion date has

already expired and the appellant’s solicitor sent a notice to the respondent on 26th July.

On 9th August, the respondent’s solicitor telephoned the secretary of the appellant’s

solicitor and asked for an extension of the date of completion on 17th August. The

secretary said “I think that’ll be alright but I’ll have to get instructions”. The

respondent relied on the statement. On 14th August, the appellant’s solicitor sent a

notice by hand to the respondent’s solicitor stating that the contract had rescinded on

11th August and they demanded the immediate possession of the land.

The High Court held that the conduct of the solicitor’s clerk made it inequitable for the

appellant to rescind the contract without first giving them a reasonable notice to inform

the respondent that they must complete the payment and giving them a reasonable

opportunity to do so.

In the case of Legione v Hateley,218 the plea of promissory estoppel was disallowed, it

marked a new wave of transformation in Australian contract law.219Promissory

estoppels continue to be recognized and applied in the case of Walton Store v Maher220

whereas in this case, court decided to widen the application of promissory estoppel

both as a shield and sword. Through this case, Australian had made a major

breakthrough in the development of this equitable doctrine of promissory estoppel221.

This decision has made a major big turn from the traditional approach222 adopted by

other common law courts by deciding that promissory estoppels could be a cause of

action.223 Australian court has declared that the application of promissory estoppel is to

218 (1983) 152 CLR 406., Supra Note 16219 Ibid220 (1998) 164 CLR 387221 Supra Note 16, at p. 43222 Ibid., Refer to the case of Hughes v Metropolitan Railway Co (1877) 2 App.cas.439, House of Lords223 Ibid

41

prevent any unconscionable conduct.224 The case which upholds this notion is the

Commonwealth of Australia v Verwayen.225

3.3 The problem as to the application of promissory estoppel

Australian law have not legislated the doctrine of promissory estoppels into their law.

Because of that, there is no justification or denying for the application of this doctrine

in the absence a pre-existing relationship. However, judge in Walton v Maher 226 gave

his judgment by saying that; when a promise has been made and some alteration made

to the earlier promise by non-contractual promise, the creation of new promise will be

recognized instead of the earlier promise.

The judge in the case of O’ Donoghue v Minister for immigration and citizenship and

Anotherr 227also mentions about the difficulties of applying the doctrine of promissory

estoppels in administrative decisions and concluded that the doctrine must not apply to

fetter the exercise of the statutory duty under s 65 of Migration Act 1958.

According to the judgment, can be implied that since there is no specific law in statute

which provide for the application of promissory estoppel in Australian law, this

doctrine can be applied as long as it does not interfere with application of other statute.

This also gives options for the judge to choose whether to invoke or not promissory

estoppels into their decision. This could deny the fundamental right of the defendant to

have a fair hearing which is provided under article 10 of Universal Declaration of

Human Right which says

“Everyone is entitled in full equality to a fair and public hearing by an

independent and impartial tribunal, in the determination of his rights and

obligations and of any criminal charge against him.” 228

224 Ibid225 (1990) 170 CLR 394226 164 CLR 387 (1998)227 (No 3)- 121 ALD 575 (2011)228 Article 10, Universal Declaration of Human Right (UDHR)

42

3.4 Conclusion

To conclude, the application of promissory estoppel was first recognised in the

case of Grundtv Great Boulder Pty Gold Mines Ltd 229 but the application of this

doctrine was only attained its legitimacy in the case of Legione v Hateley230. Australian

court had escaped from the traditional doctrine that promissory estoppel can only be

used as a shield, by adopting a wider view. It is in the case of Legione v Hateley that

the Australian court recognises the application of promissory estoppel as both shield

and sword, or in other words, promissory estoppel could be used as a cause of action.

3.5 The application of Promissory Estoppel in United States of America

3.5.1 The History

What is certain is that no interpretation can explain all the cases, and that the various

requirements of promissory estoppel are hard to state and harder to apply231.

Nevertheless, it is suggested that the basic ideas presented here, coupled with an

understanding of the contractual variation context of promissory estoppel and the

formality rules of contract law that provide the context for the doctrine of promissory

estoppel, should go some way to demystifying a challenging topic, in Malaysia.

In the United States, although it has been known that the application of law in the

country is vary from Malaysia which applied the Common Law. The origins of the

doctrine of promissory estoppel in the American law of contracts vested in

the Restatement (First) of Contracts 1932. Generally by facts and evidences, there are

so many trial and cases in the scope of Promissory Estoppel. Like all legal inventions

or transplants, the American doctrine of promissory estoppel was developed to address

a perceived problem in the extant legal doctrines. The problem which the doctrine of

promissory estoppel was meant to address has been described in dozens of articles and

commentaries. Only a brief rehash is necessary here. By the beginning of the twentieth

229 59 CLR 641 (1937)230 152 CLR 406 (1983)231 Kramer, A. (2002). "The many doctrines of promissory estoppel."Student Law ReviewVolume 37 18.

43

century, due to the influences of Classical Legal Thought (CLT) on the evolution of the

doctrines of contract law, the doctrine of consideration had been defined in singularly

narrow terms to exclude all non-bargain promissory transactions.

3.5.2 The Birth and the Need of Enforcement

This emergence of the bargain theory of contracts meant that all promises in which the

promisor did not specifically bargain for a return promise or performance went un-

enforced even if the promisee had suffered substantial detriment as a result of her

reliance on the promise. A promise would not be enforced even if the promisee had

relied on it to incur substantial detriment as long as the promisee’s acts of reliance were

not bargained for or requested by the promisor in making her promise. Such reliance

was termed “unbargained-for reliance” and did not meet the requirements of

consideration. Hence, the definition of consideration sometimes worked harsh results.

The possibility of working unfairness on promisees became greater in American

contract law when the definition of consideration explicitly embraced the bargain

element toward the end of the nineteenth century. Before this evolution to the bargain

theory, consideration was mainly defined only in terms of benefit to the promisor or

detriment to the promisee. A good American example is the definition of consideration

given in the venerable case of Hamer v. Sidway232, a leading case in almost all first-

year contracts case books. In this case, Judge Parker endorsed the definition of

consideration given by treatise writer Anson:

“The Courts will not ask whether the thing which forms the consideration

does in fact benefit the promisee or a third party, or is of any substantial

value to anyone. It is enough that something is promised, done, forborne,

or suffered by the party to whom the promise is made as consideration for

the promise made to him.”233

232 Hamer, 27 N.E. at 257 (quoting Currie, 10 L.R. Exch. at 162).233 Ibid

44

Both these English and American definitions of consideration required that a plaintiff

prove only one element in order to succeed on a contract theory: a benefit to the

defendant or a detriment to the plaintiff. To this pre-classical element of consideration”

namely benefit to the promisor or detriment to the promisee CLT sought to add a

second element. This was the element of bargain. According to CLT, it was not merely

sufficient that the promisor had benefited or that the promisee had suffered some

detriment: CLT insisted that the benefit or the detriment must have been conferred, or

suffered as the case may be, as an inducement for the promise, as example the action

conferring benefit or inflicting detriment must have been bargained for in exchange for

the promise.

This changing definition of consideration heralded the rise of the bargain theory of

consideration. Among the greatest supporters for the bargain-based definition of

consideration in the United States was Justice Oliver Wendell Holmes 234 which was

explicitly attacking the detriment-benefit definition when he put the landmark famous

definition of consideration in terms of bargain. However, in Williston’s235 view,

consideration was not a major element or conditions need to be study thoroughly, it’s

the matter of justifiable reliance of the promise which later created the terminology of

‘estoppel’. In the end, therefore, Williston’s formulation of section 90 of the First

Restatement ended up unwittingly contributing toward the fusing of estoppel into one

area of law in the United States. This fusion236 was brought about because under the

new promissory estoppel doctrine, all representations which were justifiably relied

upon could be used as the basis of a cause of action.237

234 Oliver Wendell Holmes, Jr., has been famously described as “the great oracle of American legal thought.” Thomas C. Grey, Holmes and Legal Pragmatism, 41 Stan. L. Rev. 787, 787 (1989). Holmes’s writings at the time were interpreted as an attack on Langdellian formalism, and he was therefore considered as the first legal realist. See, e.g., Steven J. Burton, Introduction to The Path of the Law and Its Influence:   The Legacy of Oliver Wendell Holmes, Jr. 2 (Steven J. Burton ed., 2000).

235 Samuel Williston was a professor at Harvard Law School. He was one of the founding members of the American Law Institute (ALI) as a “movement . . . which should have the broad object of improving the law.” Samuel Williston, Life and Law: an Autobiography 310 (1940). It was Williston, together with Professor Joseph Beale of Harvard Law School, and Mr. William Draper Lewis (who later become the Director of ALI) who proposed that ALI undertake the “project of a Restatement of the common law in as brief, exact, and simple form as was possible.

236 This fusion has, in part, provided inspiration for English law to achieve the same fusion. Australia followed the U.S. lead in this regard. See Waltons Stores (Interstate) Ltd. v. Maher, 1988, 164 C.L.R. 387 [38].

237 Ibid

45

From here, the restatement evolves and known as The Restatement (Second) of the Law

of Contracts which is one of the best-recognized and frequently-cited legal treatisesin

all of American jurisprudence. Every first year law student in the United States is

exposed to it, and it is probably the most-cited non-binding authority in all of U.S.  The

second edition was begun in 1962 and completed by the American Law Institute in

1979. By the virtue of Section 90 of Restatement (Second) of the Law of

Contracts stated that, promise reasonably inducing action or forbearance:

“A promise which the promisor should reasonably expect to induce action or

forbearance on the part of the promisee or a third person and which does

induce such action or forbearance is binding if injustice can be avoided only by

enforcement of the promise. The remedy granted for breach may be limited as

justice requires.” 238

3.5.3 The Application, Cases and Statistics

Estoppel was never meant to protect the indolent or the incompetent. Thus, if a party

could have protected itself with a contract, estoppel would not be used to protect her.

The application had been widely enforce and can be seen through many cases which

the cases can be divided into so many league such as charitable subscriptions239,

employment240, franchises241. These are the example of division and type of cases

identified in the American legal system that is being applied presently. There are a lot

238 Section 90 of Restatement (Second) of the Law of Contracts239 Salsbury v. Northwestern Bell Telephone Co., 221 N.W. 2d 609 (Iowa 1974), where defendant promised to give

$15,000 to the college. The college was later closed and the trustees sought to recover the pledge. The court held that the promise was binding. Pledges to charity are enforceable via promissory estoppel without a showing of detrimental reliance.

240 Hayes v. Plantations Steel Co., 438 A.2d 1091, (1982), in this case an employee discussed a pension with his employer after announcing his retirement. The employer stopped paying the pension after three years. The court held that the promise was not enforceable because the plaintiff did not retire in reliance on the contract.

241 Hoffman v. Red Owl Stores, Inc.26 Wis.2d 683, 133 N.W.2d 267 (Wis. 1965) where the plaintiff sold his bakery and invested significant time and expense in reliance upon Red Owl’s assurances that he would be granted a franchise. He never received the franchise and sued to recover for his expenses. The court ruled for plaintiff on the basis of promissory estoppel. Damages were only as necessary to avoid injustice and could not exceed actual loss.

46

more types of cases which emphasize on the element of promise such as gratuitous

promises242, option contracts243 and subcontractor bid or construction projects244

In general, by the virtue of Section 90 Restatement (Second) of Contracts the elements

of promissory estoppel are: first, a promise reasonably expected by the promissor to

induce action or forbearance, second, action or forbearance by the promisee in

justifiable reliance on the promise (i.e. “detrimental reliance”), and third, injustice can

be avoided only through enforcement of the promise. By insisting that the “detriment”

(or benefit must have been) given in exchange for the promise,[this definition of

consideration] effectively ignored the possibility of the promisee’s substantial change

of position in reliance on the promise, not bargained for as the price of the promise, but

substantial and detrimental nevertheless. Other elements and grounds that can be

consider for a good grounds of claim shown as graft in Table 1 below.

Table 1. Reasons and grounds for promissory estoppel (all courts)245

Promissory estoppel was originally conceptualized as a relatively insignificant form of

promissory recovery—an “unwanted stepchild” of the Restatement intended to

supplement, rather than compete with, the traditional bargain-based theory of contracts

in mostly non-commercial situations. For Promissory Estoppel Success Rates

(Overall), indicated in Tables 2 below that promissory estoppel claims tended to

succeed much more often than has been previously reported. In fact, the data reveal

242 Ricketts v. Scothorn 57 Neb. 51, 77 N.W. 365 (Neb. 1898) where a grandfather’s promise to give his granddaughter $2,000 to enable her to stop working was held enforceable. A promise can be enforced without consideration if there has been detrimental reliance on the part of the promisee.

243 Berryman v. Kmoch, 221 Kan. 304, 559 P.2d 790 (1977), in this case Berryman gave Kmoch an option contract for real estate in exchange for ten dollars which was never paid. Berryman sold the property before the option expired. The court held that the contract was valid. Option contracts must be supported by consideration, but promissory estoppel applies to such contracts.

244 James Baird Co. v. Gimbel Bros.64 F.2d 344 (2nd Cir. 1933), in this case efendant submitted a subcontractor bid which the plaintiff relied upon in calculating the general contract bid. Defendant realized that it had miscalculated the bid and attempted to withdraw it. Plaintiff was awarded the general contract and sued for damages when defendant refused to perform. The court found for the subcontractor. Promissory estoppel does not render a subcontractor’s bid irrevocable even where the contractor has relied upon it in submitting a bid for a general contract.

245 Marco J. Jimenez, "The Many Faces Of Promissory Estoppel : An Empirical Analysis Under The Restatement (Second) of Contracts," UCLA Law Review 57, no. 669 (2010).

47

that promissory estoppel cases decided under the Restatement (Second) of Contracts

are successful about 53 percent of the time. This, coupled with the extraordinary

growth of promissory estoppel cases over the past decades, including the particularly

impressive explosion of promissory estoppel cases since the Restatement (Second) was

published in 1981, supports the conclusion that promissory estoppel is a growing and

increasingly significant form of promissory recovery and the progressive process can

be seen in Table 3.

Table 2. Promissory Estoppel Success Rates (overall) 246

Year

Succes

s

Failur

e Percentage of Success (%)

1981 3 2 60

1982 6 5 55

1983 4 3 57

1984 6 4 60

1985 8 4 67

1986 3 5 38

1987 6 7 46

1988 5 6 45

1989 4 5 44

1990 6 7 46

1991 8 8 50

1992 5 6 45

1993 9 6 60

1994 8 5 62

1995 6 3 67

246 Supra Note 242

48

1996 9 3 75

1997 8 6 57

1998 6 3 67

1999 5 8 63

2000 7 2 78

2001 3 1 75

2002 4 7 57

2003 10 8 56

2004 8 5 62

2005 12 16 43

2006 7 11 64

2007 7 9 44

Total

s 173 155 53

Table 3. Promissory Estoppel Cases Decided by Decade247

Decade No. of Cases

1900 - 1909 0

1910 - 1919 0

1920 - 1929 8

1930 - 1939 41

1940 - 1949 64

1950 - 1959 87

1960 - 1969 189

1970 - 1979 415

247 Ibid.

49

1980 - 1989 1688

1990 - 1999 4883

2000 - present 6100

Totals 13,475

Table 4. Success Rate of Promissory Estoppel Claims Decided by Trial Courts248

248 Ibid.

50

Although Table 4 249 reveals that promissory estoppel claimants survived an opposing

motion to dismiss or motion for summary judgment about 50 percent of the time,

which one might expect given the figures presented in Table 2, the number of cases in

which plaintiffs were successful on the merits of their promissory estoppel claims is

more surprising.

3.6 Conclusion

From the data collected by the analysis, cases and the history in United States of

America, the doctrine of promissory estoppel which engrave in the contract the act and

endeavour the journey since 1920, published in 1932 as First Restatement of Contract

and going through refurbishment by Second Restatement of Contract until 1979, it is

safe to say that United State had practice a stable legal provision for managing and

uphold the justice in cases and matters involving detrimental reliance of promise or

promissory estoppel. Although it is basically a persuasive foundation type of law in

Malaysia to apply, it seems reasonable because the discussion above narrow down the

need of the promissory estoppel in United State which may be possibly be transplanted

in Malaysia because it does not involve any judicial precedent nor judgment, it’s the

theory which Malaysia may adopt as a master copy to be inserted in the Malaysian

Contract Act 1950.249 Supra Note 243

51

CHAPTER FOUR

THE RECOMMENDATION

52

4.1 Introduction

The previous chapter has provided the comparative research on how the doctrine of

Promissory Estoppel being developed from the traditional notion up until in the recent

times which more spaces had been given for this doctrine to breathe throughout the

local cases.

4.2 Recommendation

To have the recommendation, the problem statements that have been stated in the

earlier part of this research paper shall be ascertained. The problems are 1) the

parameter of the application was not clearly defined, 2) There are very limited in the

application of this doctrine in order to facilitate our court in Malaysia since it is in the

form of equitable doctrine. 3) There are statutory limitations which stated in section

3(1) of Civil Law Act 1956 since according to this section, the way to apply the

doctrine of Promissory Estoppel is when there is a lacuna in the local statute. It is to see

the possibility of the implementation of Promissory Estoppel in Malaysian statute.

4.2.1 The parameter of the application was not clearly defined.

In order to know, to what extent this doctrine can be applied, several traditional

limitations must prove to be solved.

(a) Promissory Estoppel as a sword

In Australia, the application of promissory estoppels can be made as a cause of

action.250 We can see in the case of Lee Gleeson Pty Ltd v Sterling Estates Pty

Ltd.251 In this case It was suggest that the Australian courts have been more valiant

in their efforts to treat the use of promissory estoppels as a sword where the courts

confidence in trying to make this doctrine also available to plaintiff as a cause of

250 Supra Note 16251 [1991] 23 NSWLR 571

53

action.252 This might be due to the influence of the prevailing notion of

unconscionability, which has a firmer footing in the United States.253

Whereby in Malaysia, it is found in the most outstanding Malaysian case on

promissory estoppels which is Boustead Trading (1985) SdnBhd v Arab –

Malaysian Merchant Bank Bhd.254Sri Ram’s attempts in comparing the position of

this equitable doctrine in Malaysia and the US can be seen as a strong indication to

loosen the strict rules limiting the application of this doctrine in Malaysia, which

was due to the colonial influence by liberal approach adopted by US.255

Thus the attempt was taken by the Malaysian Federal Court to adopt the American

liberal approach and to follow the footstep of its Australian counterpart is perhaps a

much awaited call to the Malaysian law to move forward256.

(b) The absence of pre-existing contractual relationship

The most illustrious Australian case to this effect is Walton Store case257. Though

both parties admitted that no contract has been duly executed since the appellants

did not execute the exchange of the lease, which inevitably shows that no pre-

existing contractual relationship nor any contractual relationship had ever existed

between the parties, promissory estoppels was still granted based on the

representation by the appellant during the course of the negotiations that the store

“should be erected by mid-January 1984”.258

The performance of a contractual right is strictly governed by the terms of the

agreement while satisfying an equity based on estoppels may be carried out

according to what is necessary to prevent harm or detriment resulting from an

unconscionable conduct.259 By making the above distinction, Brennan J can be 252 Supra Note 16253 Ibid254 Ibid., See also Boustead Trading (1985) SdnBhd v Arab – Malaysian Merchant Bank Bhd [1995] 3 MLJ 331255 Ibid256 Ibid257 Ibid., See also Walton Store v Maher (1988) 164 CLR 387258 Ibid259 Ibid

54

safely said as explicating the views of the other Australian judges, who had

previously initiated the move to apply this doctrine beyond contractual

relationship.260

In Malaysia In affirming the trial judge’s decision in the local case Teh Poh Wah v

Seremban Securities Sdn Bhd 261, Sri Ram JCA held to the effect that,

“In our judgement, this appeal may quite satisfactorily be resolved by

reference to the doctrine of estoppels.262 It is a flexible doctrine by which the

courts seed to do essential justice between the litigating parties…The

doctrine may be applied to enlarge or reduce the rights or obligations of a

party under a contract..It has been applied to prevent a litigant from

asserting that there was no valid and binding contract between him and his

opponent”.263

(c) Detrimental reliance versus unconscionability

Deane J explained that the “Unconscionable dealing looks to the conduct of the

stronger party in attempting to enforce, or retain the benefit of, a dealing with a

person under special disability in circumstances where it is not consistent with

equity or good conscience that he should do so.”264

The notion of unconscionability in Australia has been relatively considered as the

underlying basis in equitable estoppels.265 The Australian court had given their

tendency on the requirement of detriment in the case of Chin v Miller266 where

Parkinson supports the reliance-based approach in estoppels by saying that

estoppels must be seen as operating to protect against detrimental reliance.267

260 Ibid261 Supra Note 16., See also The PohWah v Seremban Securities SdnBhd [1996] MLJ 701262 Ibid263 Ibid264 Ibid265 Ibid266 Ibid., See also Chin v Miller (1981) 37 ALR 171. 267 Ibid

55

Unconscionability is accepted in Malaysia through the case of Wong JuatEng v

Then Thaw Eu & Anor268, where the requirement of detrimental reliance was

recapped by the federal court as one of the limitations to promissory estoppels.269

Several more cases such as Bencon Development Sdn Bhd v Yeoh Cheng Heng270

has proven the readiness of the Malaysian Courts to explore the newer notion of

unconscionability in the equity realm.271

(d) Temporary suspensions vs permanent extinction

An interesting account between the two effects of this doctrine in Australia can be

seen in Silovi Pte Ltd V Barbaro and others.272

In Malaysia, the question of the effect of promissory estoppels is permanent or

extinctive depends on the nature of representation made between the parties.273.

This can be seen in the case of Sim Siok Eng v Government of Malaysia 274 where

Raja Azlan Shah drew a demarcation which shows the effect of promissory

estoppels are based on the intention of the promisor who made the representation.275

4.2.2 There are very limited in the application of this doctrine in order to facilitate

our court in Malaysia since it is in the form of equitable doctrine.

268 Ibid, See also Wong JuatEng v Then Thaw Eu&Anor [1965] MLJ 133269 Ibid270 Ibid., BenconDevelopment SdnBhd v Yeoh Cheng Heng [1996] 4 CLJ 25271 Supra Note 16272 Ibid.,In this case, although the estoppels in this case only operated until the specified date stated, it cannot be

simply assumed that the effect of this doctrine was merely suspensory. The rights sought to be protected by the respondents were the 10-year lease, which was by no means perpetual, and the action of the court to exclude the contract of sale to be concluded until after the expiry of the lease period may strongly be taken that the right of the owner to sell the land during such period was completely extinguished. Thus, the effect of the promissory estoppels in this case is permanent, though seen as suspensory.

273 See Matta, Ali Muhammad. “ The Development of Promissory Estoppel”, 1999, International Workshop on Estoppel (Kuala Lumpur), at p. 8.

274 Ibid., See also SimSiokEng v Government of Malaysia [1978] 1 MLJ 15275 Ibid

56

Promissory estoppel is an English doctrine of equity which is accepted in the

common law countries.276 Whereby in United States, this doctrine has been adopted

into a statutory provision under article 90 of the Second Restatement of Contract

thereby make it easier to assist in the judgement of the court.277

In Malaysia, the application is restricted by equitable principle which been applied

by common law countries.278 Thereby, to break such boundaries, Malaysia shall

follow the footsteps of United States in enacting promissory estoppels into their

Article 90 of the Second Restatement of Contract where it could help Malaysia in

the application of this doctrine without being bound by the section 3(1) of Civil

Law Act 1956 anymore.279

4.2.3 There are statutory limitations which stated in section 3(1) of Civil Law Act

1956 since according to this section, the way to apply the doctrine of

Promissory Estoppel is when there is a lacunae in the local statute.

According to the judgment many of the cases, it can be implied that since there is

no specific law in statute which provide for the application of promissory estoppel

in Australian law, this doctrine can be applied as long as it does not interfere with

application of other statute.280 This also gives options for the judge to choose

whether to invoke or not promissory estoppels into their decision.281

This is quite similar to Malaysia282 where, although we always give a warm

welcome to the coming of this doctrine throughout the local cases, however we are

still restricted by section 3(1) of Civil Law Act 1956 since we do not have our own

statutory provision regarding Promissory Estoppels.283

276 Supra Note 273277 Ibid278 Ibid279 Ibid280 Supra Note 16281 Ibid282 Ibid283 Supra Note 16

57

In US, although it has been known that the application of law in the country is vary

from Malaysia which applied the Common Law.284 The origins of the doctrine of

promissory estoppel in the American law of contracts vested in the Restatement

(First) of Contracts 1932 and it has going through reconstruction by Second

Restatement of Contract until 1979, thus it is safe to say that United State had

practice a stable legal provision for managing and uphold the justice in cases and

matters involving detrimental reliance of promise or promissory estoppels.285

4.3 Conclusion

The idea of welcoming the doctrine of Promissory Estoppel, as applied by the courts

under the Restatement (Second) of Contracts, is a significant form of promissory

recovery.286 Indeed, it is worth to say that the doctrine of promissory estoppels,

plaintiffs litigating the merits of their dispute do not worse and may even fare better

than the plaintiffs litigating the merits of traditional breach of contract claim, regardless

of the court hearing the claim. Therefore, with the explosion of promissory estoppels

cases since the publication of the Restatement(Second) of Contract in 1981287, it

indicates that promissory estoppels is a healthy, vibrant and significant cause of action

that seems to be showing no signs of disappearing in the near future.

However, despite of agreeing that the application of promissory estoppels will bring a

better development and growth in today’s local law, however, it is not easy to make

this doctrine to be implemented as a new statutory provision. As we can see in United

State itself, the doctrine of Promissory Estoppels is not in a single statutory being, it

has also been inserted as Second Restatement of Contract which is derived from the

284 Ibid285 Ibid286 Daniel A. Farber & John H Matheson, Beyond Promissory Estoppel: Contract Law and the “Invisible

Handshake”, 52 U.CHI.L.REV.903,904 (1985)287 To put matters into perspective, at the time Professor Gillmore published his book in 1974, only about eight

hundred cases mentioning the term “promissory estoppels” had been decided. Yet, of the more than 13,000 cases on the books today mentioning the term “promissory estoppels,” over 12,671 of these cases have been decided since 1980, indicating that over 94 percent of all cases using the term “promissory estoppels” have been decided since the Restatement (Second) of Contracts was promulgated in 1981.

58

First Restatement of contract 1981 after being reviewed and improved, the promissory

estoppels has then being renewed as the new principle called Second Restatement of

Contract 1981.

Likewise in Malaysia, where we have the Contract Act 1950, we can adopt the same

way as the United State did. This is because the process of insertion or adding of the

provision under the existing act is easier rather than to create a new statutory provision

which will take a longer time. Though the application of Promissory Estoppels in

United States is only a persuasive means to the Malaysian law, where we cannot really

adopt and take the judicial precedent as a reference into the local cases, however, the

extent that Malaysia can take is that, we can just adopt the pattern of how the US

implements the doctrine into their statute. This is same like how the Second

Restatement has been made where the case of High Tree from England has been

referred. Hence, we can say that the United States also took the pattern of the law

involving the application of Promissory Estoppels in England and turn it into a new

form of provision. This is how we recommend Malaysia should follow the US footstep.

Thus, from the analytical and comparative study above, we recommend that a provision

regarding promissory estoppels be inserted into the existing Contract Act 1950.

Bibliography

Statutes

59

Malaysia

a. Civil Law Act 1956

b. Contracts Act 1950

England

a. English Contract Law

b. Sale of Goods Act 1979

Australia

a. Australia Trade Practices Act 1974.

United States of America

a. Restatement (First) of Contract

b. Restatement (Second) of Contract

Treaty

Universal Declaration of Human Right (UDHR)

Journal Articles

1. Alan Watson, Legal Transplants: An Approach To Comparative Law, 95 (1974).

60

2. A.L.I. Commentaries

3. Bigelow, The Principles of Estoppel: An Essay 78,82 (London, W. Maxwell & Son

1888).

4. Bigelow, Lancelot Feilding Everest, The Law of Estoppel 279 (3d ed. 1923).

5. Capper, David. "The Extinctive Effect of Promissory Estoppel."Common Law

World Review (2008).

6. Charles L. Knapp, Rescuing Reliance: The Perils of Promissory Estoppel, 49

Hastings L.J. 1191, 1196 (1998).

7. Cooke, Charles L.O. Edwards, Note, Equitable Estoppel Estoppel by

Representation, 12

8. Daniel A. Farber & John H Matheson, Beyond Promissory Estoppel: Contract Law

and the “Invisible Handshake”, 52 U.CHI.L.REV.903,904 (1985)

9. Dawson, T. Brettel. "Estoppel and Obligation: The Modern Role of Estoppel by

Convention." (1989).

10. E.K. Teh, "Promissory As a Sword," Anglo-American Law Review 13(1984).

11. Hickling, Dr. M. A. "Labouring with Promissory Estoppel: A Well-Worked

Doctrine Working Well?"17 (1983).

61

12. Kramer, A. (2002). "The many doctrines of promissory estoppel." Student Law

Review, 37. 18.

13. Lloyd Pospishil, Equitable Estoppel, 19 Neb. L. Bull. 222, 22728 (1940)

14. Marco J. Jimenez, "The Many Faces Of Promissory Estoppel : An Empirical

Analysis Under The Restatement (Second) of Contracts," UCLA Law Review 57,

no. 669 (2010).

15. Margaret Halliwell, "Estoppel: unconscionability as a cause of action " Legal Stud.

15, no. 14 (1994).

16. Matta, Ali Mohammad. "Promissory Estoppel: Does Malaysia Need This

Doctrine?".Malayan Law Journal Articles 6 (2006).

17. Ngugi, Joel M. "Promissory Estoppel: The Life History of an Ideal Legal

Transplant." University of Richmond Law Review 41, no. 2 (2007).

18. Oliver Wendell Holmes, The Common Law, 289–94 (48th prtg. Boston, Little,

Brown and Co. 1923) (1881).

19. P. S. Atiyah, 'Contract and Fair Exchange' (1985) 35 U Tor LJ 1; P. Finn,

'Equitable Estoppel' in Essays in Equity, P. Finn (ed) (1985)

20. Reuben M. Benjamin, The General Principles of the American Law of Contract 21

(Indianapolis and Kansas City, Bowen-Merrill Co. 1889)

21. Richmond, Collin F. “Promissory Estoppel- Only a Shield, Not a Sword?: Analysis

of Dewitt V. Fleming, 828 N.E.2d 756 (III. App. 5th 2005).” (2005).

62

22. Steven J. Burton, Introduction to The Path of the Law and Its Influence: The

Legacy of Oliver Wendell Holmes, Jr. 2 (Steven J. Burton ed., 2000).

23. Samuel Williston, Life and Law: an Autobiography 310 (1940)

24. Thomas C. Grey, Holmes and Legal Pragmatism, 41 Stan. L. Rev. 787, 787 (1989)

25. Wan Izatul Asma Wan Talaat, The Continuing Evolution of Promissory Estoppel:

From Rigidity to Flexibility, 2011.

26. Wan Izatul Asma.“Enacting Promissory Estoppel into the Malaysian Law:

Towards More Certainty in Litigation”.Journal of Politics and Law, (2012): 5.

27. Wan Izatul Asma Wan Talaat, "The Threats to the Limitations Outlining the Present

Parameters of Promissory Estoppel: A Comparative Study," International Journal

of Business and Social Science 3, no. 6 (2012).

28. William R. Anson, Principles of the English Law of Contract and of Agency in its

Relation to Contract 63 (Jerome C. Knowlton ed., 2d American ed. Chicago,

Callaghan and Co. 1887)).

29. William Shakespeare, Romeo and Juliet act 2, sc. 2.

30. Wright, Robert Lee. "Promissory Estoppel Marches on- Mooreburger." (1976).

63